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artnet AG Annual Report 2015

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artnet AG

Annual Report 2015


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Development of the artnet AG Share XETRA Closing Prices in 2015

Key Financial Figures for the artnet Group

12/31/2015 12/31/2014Difference (Balance)

Revenue (k EUR) 17,285 13,907 3,378

Profit from Operations (k EUR) 707 (588) 1,295

Earnings Before Tax (k EUR) 671 (2,197) 2,868

Earnings per Share (EUR) 0.12 (0.55) 0.67

Weighted Number of Shares (k EUR) 5,553 5,553 –

Cash Flow from Operating Activities (k EUR) (40) 827 (867)

Staff (Year End) 118 106 12

Cash and Cash Equivalents (k EUR) 1,181 1,529 (348)

Equity (k EUR) (223) 2,214 (2,437)

Total Assets (k EUR) 4,627 6,039 (1,412)

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Table of Contents

Letter to the Shareholders ..................................................................................................................................................................... 1

Core Statement .................................................................................................................................................................................... 4

Company Development ......................................................................................................................................................................... 4

Company Background .......................................................................................................................................................................... 5

Report of the Supervisory Board ........................................................................................................................................................... 6

Corporate Governance Report ............................................................................................................................................................ 10

Responsibility Statement ..................................................................................................................................................................... 13

Group Management Report 2015 ........................................................................................................................................................ 14

Consolidated Financial Statements 2015 ............................................................................................................................................. 28

artnet AG Consolidated Balance Sheet ................................................................................................................................................ 29

artnet AG Consolidated Income Statement .......................................................................................................................................... 30

artnet AG Consolidated Statement of Changes in Shareholders Equity (USD and EUR) ........................................................................ 31

artnet AG Consolidated Statement of Cash Flows ............................................................................................................................... 32

Notes to the Consolidated Financial Statements 2015 ......................................................................................................................... 33

English Translation of the Independent Auditors’ Report ...................................................................................................................... 54

artnet Authorities, Addresses, Investor Relations, artnet Stock ............................................................................................................. 55


1

Dear Shareholders,

I am pleased to present to you the 2015 Annual Report.

Over the course of the year, artnet achieved the highest revenue in the Company’s

history. Compared to 2014, revenue increased by 24.3% to 17.3 million EUR, and by

3.9% to 19.2 million USD. In addition to the strong growth of our advertising revenue,

the changes in the euro-US dollar exchange rate had a significant influence on the

Company’s net profit, resulting in an increased revenue in euros and a decreased

revenue in US dollars. The result was positive, achieving a profit of 0.65 million EUR

(0.71 million USD) that exceeded our predictions, thanks in part to our successful effort

to reduce costs.

Revenue from artnet Auctions decreased by 8% in US dollars, while ultimately resulting

in a 10% growth in Euros due to the exchange rate. Compared to the previous year, the

number of lots sold increased by 13%, while the overall revenue achieved per auction

specialist also increased. The public’s growing acceptance of online art auctions was

demonstrated by a 120% increase in new registrations, a higher number of lots offered,

and an improved sell-through rate. As a result of this growing interest in the online art

auction market, more competitors entered this field to compete for desirable consign-

ments. In addition to several start-up companies—which, for good reason, do not usually

publish their results—traditional auction houses have also begun to pursue this burgeoning

market. This demonstrates that artnet’s foresight to develop an online auction platform

was the right investment, as we notably established ourselves as the first company to

offer online auctions for fine art. The proportion of online auctions within the art market is

expected to grow, and artnet will continue to stay ahead of this trend with a larger team of

auction specialists, improved efficiency, and a focus on high-value lots.

Two years ago, artnet launched a source for comprehensive art market coverage,

artnet News. Delivering relevant and timely market information to the art world has always

been a key component of the Company’s success, dating back to 1996 when artnet

became the first to publish art news online with artnet Magazine. Eventually, this product

grew outdated and its restructuring would have been have prohibitively costly, and as a

result, was shut down. With the launch of artnet News, an entirely new digital platform,

this endeavor represented an entrepreneurial challenge for the Company, as it was the

second product, after artnet Auctions, to be funded solely from our own resources.

The development of artnet News was one of the main reasons for the negative result

of the 2014 fiscal year, yet its launch has proven to be a major success that continues

to offer new possibilities for the Company as a whole. It quickly became the most read

and influential art news platform in the world, with visits in 2015 almost doubling as

compared to the previous year. Advertising revenue subsequently increased by 128.4%

Jacob Pabst

CEO, artnet AG


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in euros (91% in US dollars) as compared to 2014, leading to a positive result for the

Company in the 2015 fiscal year. To continue to expand and capitalize on this success

in the coming year, we have increased our international sales team. Thanks to the

additional revenue provided from advertising, we can also allocate more resources to

artnet Auctions to continue to expand our leadership in this field.

Meanwhile, revenue from Price Database subscriptions increased by 17.2% in euros and

decreased slightly by 3.8% in US dollars. It should be noted, however, that the aforemen-

tioned changes in currency exchange rates led to this negative US dollar figure, as a portion

of our revenue is generated in euros—were it not for this effect, revenue in US dollars would

have been positive as well. The number of auction results in the Price Database exceeded

10 million in 2015, continuing its role as the most comprehensive database of its kind. Every

lot is catalogued, translated, and edited by our team of multilingual specialists, ensuring

its unrivaled quality that is trusted by auction houses, galleries, and collectors worldwide.

As intended, we emphasized yearly contracts instead of short-term subscriptions, thereby

achieving a higher client retention rate and a more predictable revenue stream. Over the

course of the current fiscal year, we will continue to focus on institutional clients and

redesign a simplified product page in order to attract new subscribers.

Despite growing competition, revenue from the Galleries segment remained stable,

achieving an overall increase of 6% in US dollars. Revenue from the Gallery Network

increased by 9% in euros, yet decreased by 9% in US dollars. The overall positive

revenue of the segment was achieved through the higher number of visitors to the site,

which greatly raised the value of our memberships and advertising space. Moreover,

Auction House Partnerships was successful with a 17% overall revenue increase in US

dollars, thereby strengthening our longstanding close relationships with international

auction houses. In the current fiscal year, we will work on improving the presentation of

galleries and their inventory on artnet, while simultaneously simplifying the usability of

gallery member sites. The Gallery Network will therefore be improved considerably in

2016, and the sales team will aim at selling more memberships and advertising space

to galleries to further grow revenue from this segment.

In the lawsuit of a French photographer concerning his claim of copyright violation, the

French Court of Cassation has ruled in favor of the photographer on a procedural aspect,

after artnet had filed an appeal. In the previous level of jurisdiction, the Paris Court of

Appeal had ordered artnet AG, artnet France Sarl, and Artnet Worldwide Corporation

to pay approximately 0.76 million EUR to the photographer, holding all three jointly and

severally liable. We will continue to carefully evaluate our options in this ongoing matter.

To achieve the goal of a third consecutive year of revenue growth, we have set ambitious

targets for the 2016 fiscal year. The successes of 2015 shall be further expanded and


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developed, meaning that we will continue to grow artnet News’ pageviews, intensify

advertising sales, concentrate on the Price Database’s institutional clients, and boost

the efficiency of artnet Auctions. Additionally, we will focus on improving the Gallery

Network, enlarging the artnet Auctions team, and expanding our site content. Thanks to

our efforts, artnet will become an even more attractive source for art research, enriching

the experience of our 2.1 million monthly visitors and expanding our leadership position

within the art market. As always, I will keep you updated on all developments regularly.

Yours sincerely,

Jacob Pabst

CEO, artnet AG


4

Core Statement

artnet is the leading online resource for the international art

market. Established in 1989, artnet provides reliable information

and market transparency to art collectors. Our comprehensive

suite of products includes the artnet Price Database, which

offers objective price information, and the artnet Gallery Network,

a platform for connecting leading galleries with collectors from

around the world.

With 24/7 worldwide bidding, artnet Auctions was the first online

marketplace for collecting art. Our auction platform allows for

immediate transactions, with seamless flow between consignors,

specialists, and collectors.

Company Development

artnet AG was formed in 1998 as an information service provider

for the art market. It took over the Artnet Worldwide Corporation,

which was formed in New York in 1989, and moved the Price

Database and the Gallery Network online by the mid-1990s.

More than any other company, artnet has modernized the way

people buy, sell, and research art. Its products provide reliable

and transparent information used by collectors, gallery owners,

museums, and investors, and have become indispensable

tools for independent market players. Through artnet Auctions,

artnet has developed from a pure information service provider

to a transaction platform, and has further expanded its leading

position in the art market.

artnet has gradually built up its information services and trans-

action platform around its first product, the Price Database Fine

Art and Design. This database was created as a response to the

decentralized art market of the late 1980s. At the time, the market

lacked transparency, which was a stumbling block for buyers in

particular. The art business had, of course, always been inter-

national, but it was managed locally in a relatively inefficient

market by tens of thousands of geographically disparate art

dealers, galleries, auction houses, book publishers, museums,

and collectors.

The Price Database provides these local markets with a global

standard of comparison, listing fine art, design, and decorative

art auction results, including results for more than 320,000 artists

and designers. Since 2009, the Price Database Decorative Art

has provided results for international antique auctions. Today, the

Price Database contains over 10 million auction results from more

than 1,700 international auction houses, dating back to 1985.

Another pillar of the artnet business is the Gallery Network, which

was introduced in 1995. With 1,300 galleries and approximately

170,000 artworks by nearly 35,000 artists from around the globe,

this product is the world’s most comprehensive platform for

galleries online. The Gallery Network serves dealers and art

buyers in equal measure by giving them an overview of the

global market, prices, and price trends, and allowing users to be

in direct contact with the gallery.

Created in 2008, artnet Auctions was the first online platform

dedicated to buying and selling art. With faster turnaround and

lower comm issions, artnet Auctions is available around the clock.

Every component of a sale, from consignments to the placing

of bids, happens more efficiently and quickly than at traditional

brick-and-mortar auction houses.

In 2014, artnet launched a 24/7 global art newswire: artnet News.

artnet News is a one-stop platform for the events, trends, devel-

opments, and people that shape the art market and global art

industry, providing up-to-the-minute analysis and commentary,

with the highest possible standards in cultural journalism.

An office was opened in London in November 2007, with the

formation of artnet UK Ltd., the UK subsidiary of Artnet Worldwide

Corporation. artnet AG and its subsidiaries employ a total of 115

people. The office in Paris was closed in 2012, and, since then,

the French subsidiary has been inactive.


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Company Background

artnet.com AG was incorporated under the laws of Germany

in 1998. In 1999, Management took the Company public on

the Neuer Markt of the Frankfurt Stock Exchange. In 2002,

artnet .com AG changed its name to artnet AG. On October

4, 2002, artnet AG left the Neuer Markt, and was then listed

in the General Standard of the Frankfurt Stock Exchange, a

segment of the EU-regulated Geregelter Markt. Ef fective

February 1, 2007, artnet AG is listed in the Prime Standard of

the Frankfurt Stock Exchange, the segment with the highest

transparency standards. Its principal holding is its wholly owned

subsidiary, Artnet Worldwide Corporation, a New York corpo-

ration that was founded in 1989. The consolidated financial

statements are prepared in accordance with the International

Financial Reporting Standards (IFRS).


6

Report of the Supervisory Board

The Supervisory Board held five meetings in 2015, on April 23, 2015,

May 28, 2015, July 15, 2015, September 28–29, 2015, and

December 16, 2015, all of which were unanimously attended.

Three of these meetings were held by telephone, and consisted

of the exchange of relevant operating, technical, and financial

information. Two were in-person meetings held at the Company

headquarters in Berlin and at the offices in New York. In each

case, the chair distributed draft agendas in advance and, after

several phone and email exchanges, the agenda was finalized

and the scope of each meeting was defined. Board members

exchanged several “unanimous consent” resolutions after email

and telephone discussions to adopt certain resolutions. In

addition, there were numerous informal telephone conferences

and frequent email exchanges on specific business matters. We

monitored the activities, decisions, and performance of Jacob

Pabst, CEO and sole member of the Management Board, and,

in addition worked closely with Michael Probst, vice president

of finance. At the meetings held in Berlin and New York, we

dealt with strategic planning and budgets, and interviewed

key management personnel concerning their general business

outlook and projects; in New York, we adopted a preliminary

budget for 2016. Members of the Supervisory Board met individ-

ually with the Management Board and other key officers in New

York and Berlin. They provided legal, financial, editorial, and

other business advice in regards to business progress and, in

particular, to certain ongoing litigations.

The Supervisory Board received regular, detailed management

reports throughout the entire year in both written (email) and

oral form from the Management Board. These reports detailed

the Company’s current status, the course of its business, its

strategy, and various important decisions. The quar terly

reports, semi-annual reports, and the detailed results from

the individual segments were reviewed with the Management

Board. In addition, the board discussed issues of fundamental

importance for corporate policy on an ongoing basis with the

Supervisory Board. These included financial planning (cash

management and expense management), technical (website

and app) development, the progress of the Auctions segment,

the stabilization of the Gallery Network, the continued growth of

the Price Database, and the status of advertising and marketing,

particularly in connection with artnet News. The Supervisory

Board has not formed any committees.

The Supervisory Board’s meetings focused on discussing revenue

and profit growth, the Company’s liquidity, and its major expendi-

tures, as well as its human resources policies, international activ-

ities (particularly the proposal to enter the Chinese art market), and

the future position of the individual segments. We focused on the

monthly reporting of the growth of the artnet News segment and

related advertising revenues. We are pleased to report that artnet

News is already considered the most important online publication

in the art world, and are confident that the upward trend in adver-

tising revenue will continue. The existence of artnet News has

resulted in substantially increased traffic to our Price Database and

Auctions segments, as had been anticipated.

In 2015, artnet maintained its momentum of growth and increased

its revenue to 19.2 million USD, the highest revenue ever achieved

in the Company’s history. At the same time, due to diligent cost

management, artnet was able to lower operational expenses.

2015 was a turnaround year for artnet. Income from operations

amounted to 785,000 USD, a sharp contrast to the operating

loss of -780,000 USD reported in 2014. Processes put into

place in late 2014 insulated artnet from significant US dollar and

euro currency fluctuations. Meanwhile, the Auctions segment

continued to experience a significant increase in new regis-

trations, in both buyers and sellers. The Gallery Network and

Auction House Partnerships member sites underwent redesigns,

and an iPhone app for artnet News was launched.

The Management Board has been diligent in expense and cash

management. The Supervisory Board reviews monthly figures

which contain detailed breakdowns of the source and appli-

cation of funds. Cash on hand decreased throughout the year,

but expenses also declined as a percentage of revenue—and,

most notably, short- and long-term liabilities decreased signifi-

cantly. We are pleased to report that artnet achieved a profit of

709,000 USD in 2015.


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John Hushon

Chairman of the Supervisory Board

A key factor in the success of the Company is the continued

addition of auction results to the Price Database in a timely

manner. In 2015, the number of results in the database exceeded

10 million. Furthermore, as artnet is an online service, growth

in web traffic is essential. Following the launch of artnet News,

the number of visits to artnet increased by 35% in 2015, with a

monthly average of 2.1 million users.

At the Annual General Meeting in July 2015, we disclosed the

existence of ongoing litigations in France and Germany relating to

allegations of copyright infringement made by a photographer. In

2014, after consulting with auditors, artnet reserved 950,000 EUR

for the purpose of anticipated legal expenses and potential liabil-

ities associated with these litigations. The verdict in the German

case is currently pending. Meanwhile, artnet has appealed the

decision of the lower French court in this matter, and this appeal

is also still pending.

The annual financial statements (HGB) and the consolidated

financial statements (IFRS), prepared by the Management Board

for artnet AG for the 2015 fiscal year, together with the management

report and group management report were audited by the firm

Ebner Stolz GmbH & Co. KG Wirtschaftsprüfungsgesellschaft,

Steuerberatungsgesellschaft, Hamburg, Germany. The Super-

visory Board determined that the auditors are independent. The

auditors determined that both the annual financial statements

(HGB), as well as the consolidated financial statements in accor-

dance with the provisions of IFRS, present a true and fair view of

the financial position and results of operations for the financial

year, and issued an unrestricted audit opinion in each case. After

completing their assessment, the auditors participated in the

Supervisory Board’s meeting to discuss the financial statements

and report on the results of their audit. The Supervisory Board

concurred with their findings.

The Supervisory Board reviewed the annual financial state-

ments, consolidated financial statements of artnet AG, and the

associated management reports. Having completed its own

in-depth review, no objections were raised by the Supervisory

Board. The board approved the annual financial statements

for artnet AG prepared by the Board of Directors in the version

audited by Ebner Stolz GmbH & Co. KG Wirtschaftsprüfungs-

gesellschaft, Steuerberatungsgesellschaft, Hamburg, Germany,

with a resolution on April 8, 2016. The annual financial statements

as of December 31, 2015 were thus adopted. The consolidated

financial statements as of December 31, 2015 were also approved

by the Supervisory Board by way of a resolution on April 8, 2016.

The Supervisory Board would like to thank the Management Board

and all of the Company‘s employees for their work in the past year.

Naples, FL, USA, April 8, 2016


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Wayne Thiebaud, Bow Ties, 1990. Sold for $24,600 (with premium) on artnet Auctions.

Art © Wayne Thiebaud/Licensed by VAGA, New York, NY.


9

Vik Muniz, Flag, after Jasper Johns (from Pictures of Pigment), 2007. Sold for $144,000 (with premium) on artnet Auctions.

Art © Vik Muniz/Licensed by VAGA, New York, NY.


10

Corporate Governance Report

artnet attaches great importance to corporate governance.

artnet AG complies with the recommendations of the German

Corporate Governance Code in the current version dated

May 5, 2015, and published in the German Bundesnazeiger on

June 12, 2015, with the exception of the recommendations in No.

3.8 para. 3, No. 4.2.1 sent. 1, No. 5.1.2 para. 2 sent. 3, No. 5.3.1,

No. 5.3.2, No. 5.3.3, No. 5.4.1 para. 2 (age limit for members of

the Supervisory Board), and 7.1.2 sent. 4. The Management and

Supervisory boards of artnet AG have adopted the declaration

of conformity with the code detailed at the end of this report. It is

published online at artnet.com/investor-relations.

1. Supervisory Board

According to the German Aktiengesetz, ar tnet AG has a

dual-pronged management and control structure, comprising a

sole member of the Management Board and the three-person

Supervisory Board. Management and control functions are strictly

split in the dual-management system. It is not legally permis-

sible to simultaneously work for the Management Board and the

Supervisory Board. The tasks and responsibilities of these two

bodies are clearly legally defined in each case.

The Supervisory Board monitors and advises the Management

Board in conducting the business. The Supervisory Board

discusses the business growth and forecasts, as well as the

strategy and its implementation at regular intervals. In addition,

the Supervisory Board adopts the annual financial statements and

appoints the members of the Management Board. The Super-

visory Board has defined approval requirements by the Super-

visory Board for transactions of fundamental importance. These

include decisions or activities that have a fundamental impact

on the Company’s financial position or results of operations. The

Management Board provides the Supervisory Board with regular,

up-to-the-minute, comprehensive information on all of the issues

of relevance to the Company with regard to forecasting, business

growth, risks, and risk management.

The members of the Supervisory Board are independent in their

decision-making, and are not subject to instructions or speci-

fications by third parties. In addition, consulting, service, and

certain other agreements between artnet and the members of

its Supervisory Board have to be approved by the Supervisory

Board. According to Item 5.4.1 of the Code, the Supervisory

Board shall specify concrete objectives regarding its composition,

which, whilst considering the specifics of the enterprise, take into

account the international activities of the enterprise, potential

conflicts of interest, an age limit to be specified for the members

of the Supervisory Board, and diversity. These concrete objec-

tives shall, in particular, stipulate an appropriate degree of female

representation. The concrete objectives of the Supervisory Board

and the status of the implementation shall be published in the

Corporate Governance Report.

2. Management Board

The Management Board is responsible for the Company’s

management. It must follow the Company’s interests and

undertake to increase the sustained enterprise value. It is respon-

sible for the Company’s strategic orientation in agreement with

the Supervisory Board. The Management Board cooperates

closely with the Supervisory Board.

The Management Board ensures that statutory provisions are

upheld and that there is suitable risk management and risk control

at the Company.

3. Directors’ Dealings Transactions and Shareholdings of

Managing Directors and Supervisory Board Members

During the past financial year, no purchases or sales of at least

5,000 EUR were executed by members of the Company’s

Management Board and Supervisory Board, or other execu-

tives who regularly have access to the Company’s insider infor-

mation and who are authorized to make material entrepreneurial

decisions, and certain persons closely related to these persons.

On April 8, 2016, the Management Board and Supervisory Board

held 1,576,605, or 28%, of the shares or financial instruments

based thereupon.

Supervisory Board

Galerie Neuendorf AG 1,523,551 shares

John Hushon 53,054 shares


11

4. Relationship with Shareholders

artnet AG reports to its shareholders four times each financial

year on business growth and on the Group companies’ financial

position and results of operations. The annual General Meeting

is held during the first eight months of each financial year. The

General Meeting resolves, among other things, on issues including

the appropriation of profits, the ratification of the Management

and Supervisory boards, and the election of the auditor. Changes

to the articles of incorporation and capitalization activities are

resolved exclusively by the General Meeting.

5. Declaration of Conformity with the

German Corporate Governance Code

Pursuant to Section 161 of the Aktiengesetz (AktG - German Public

Limited Companies Act.), the Management Board and Supervisory

Board of artnet AG hereby announce that they have complied

with the recommendations of the German Corporate Governance

Code (“Code”) since its last Declaration of Compliance, dated

March 27, 2015. The Management Board and Supervisory Board of

artnet AG complied with the Code dated June 24, 2014 (published in

the official section of the federal gazette on September 30, 2014) from

March 27, 2015 to June 11, 2015, and complied with the Code dated

May 5, 2015 (published in the official section of the federal gazette on

June 12, 2015) until the present day, with exception of the following.

1. Number 3.8, paragraph 3: “A similar deductible must

be agreed upon in any D&O policy for the Supervisory

Board.”

artnet AG does not believe that the due care and diligence

that the members of its Supervisory Board exercise in

dis charging their duties could be increased further by

agreeing to a deductible. For this reason, artnet AG does

not intend to change existing D&O insurance policies that

do not provide for such a deductible.

2. Number 4.2.1, sentence 1: “The Board of Directors shall

be comprised of several people and have a chairman or

spokesman.”

Since its establishment, the Board of Directors of artnet AG

has been comprised of one person. By contrast, the

management of the subsidiary Artnet Worldwide Corpo-

ration in New York, which is largely responsible for operations

within the Group, is comprised of several people. To date, the

Company has not increased the size of its Board of Directors

for cost reasons.

3. Number 5.1.2, paragraph 2, sentence 3: “An age limit for

members of the Board of Directors shall be specified.”

artnet AG considers a provision of this nature to be inappro-

priate because general age limits would unduly limit the

Supervisory Board’s discretionary powers when selecting

members of the Board of Directors.

4. Number 5.3.1., Number 5.3.2., and Number 5.3.3.: In

these sections, the Code recommends that the Super-

visory Board form an Audit Committee and a Nomination

Committee.

As the Supervisory Board of artnet AG is comprised of only

three members, it does not make sense to form committees.

The tasks envisioned for the Audit Committee and the

Nomination Committee are undertaken jointly by the Super-

visory Board as a whole.

5. Number 5.4.1, paragraph 2, sentence 1: The Code recom-

mends to set an age limit for members of the Supervisory

Board.

artnet AG considers a provision of this nature to be inappro-

priate because general age limits and requirements for

diversity would unduly limit the shareholders’ discretionary

powers when selecting members of the Supervisory Board.

6. Number 7.1.2, sentence 4: “The Consolidated Financial

Statements shall be publicly accessible within 90 days

of the end of the financial year; interim reports shall

be publicly accessible within 45 days of the end of the

reporting period."

The 2015 Consolidated Financial Statements were not

published within the 90-day period recommended in the

Code. However, they will be published within the statutory

period. In the future, artnet AG intends to publish its consol-

idated financial statements within the recommended period.


12

In the future, the artnet AG will comply with the recommendations

of the current code, with exception of numbers 1 to 5 listed above.

Update to the Declaration of Compliance with

the German Corporate Governance Code

Because of recent events, the Management Board and Supervisory

Board of artnet AG hereby announce that—in a deviation from the

Declaration of Compliance dated March 16, 2016—they will not

fully comply with the recommendations of the German Corporate

Governance Code (“Code”) dated May 5, 2015 (published in the

official section of the federal gazette on June 12, 2015):

Number 7.1.2, sentence 4: “The Consolidated Financial State-

ments shall be publicly accessible within 90 days of the end of the

financial year; interim reports shall be publicly accessible within 45

days of the end of the reporting period.”

The Consolidated Financial Statements for the 2015 Fiscal Year

are not published within the 90-day period recommended in the

Code. However, they will be published within the statutory period.

In regards to this matter, we refer to the Ad-hoc Announcement

dated March 30, 2015. In the future, artnet AG intends to its

consolidated financial statements within the recommended period.

Berlin, March 31, 2016

John Hushon

Chairman of the Supervisory Board

artnet AG

Jacob Pabst

CEO

artnet AG


13

Responsibility Statement

To the best of knowledge, and in accordance with the applicable

reporting principles, the following consolidated financial state-

ments give a true and fair view of the assets, liabilities, financial

position, and profit or loss of the artnet Group. The Group

Management Report includes a fair review of the development

and performance of the business, as well as the position of the

Group, along with a description of the principal opportunities and

risks attributed to the expected Group development.

Berlin, April 7, 2016

Jacob Pabst

CEO, artnet AG


14

Group Management Report 2015

1. General Information and Business Activities

Business Model and artnet Group Organization

artnet AG is a holding company listed on the “Regulierter Markt”

in the Prime Standard segment of the Frankfurt Stock Exchange.

artnet AG’s principal holding is its wholly owned subsidiary, Artnet

Worldwide Corporation, which was formed in 1989 in New York.

artnet AG (“artnet” or the “Company”) and Artnet Worldwide

Corporation (“Artnet Corp.,” collectively the “artnet Group” or the

“Group”) operate under the trade name “artnet.”

Artnet Corp. has two wholly owned subsidiaries: artnet UK Ltd.

and artnet France Sarl. artnet France Sarl has been inactive since

2012, while artnet UK Ltd. provides sales and client support from

the United Kingdom.

With a monthly average of 2.1 million visitors to its domains,

ar tnet.com, ar tnet.com/auctions, ar tnet.de, ar tnet.fr, and

news.artnet.com, artnet offers the world’s most comprehensive

art market overview. The provision of timely information about

artwork values, artists, galleries, price developments, exhibitions,

news, and reviews enables collectors and art professionals to

better navigate the art market.

As of December 31, 2015, the artnet Gallery Network repre-

sented approximately 1,300 of the world’s most prestigious

galleries from over 60 countries. Members of the Gallery

Network are indexed by specialty and location, with approx-

imately 170,000 artworks by 35,000 artists featured on the

platform. In addition to all forms of contemporary and Modern

fine art, the Gallery Network also offers decorative art and

design objects from the 1st century BC to the present. Concur-

rently, artnet Auction House Partnerships offer an ideal way for

auction houses to gain international exposure for their sales

and drive a high volume of potential buyers directly to their

proprietary sites. With a partnership, auction houses have the

flexibility to post complete or partial sales on artnet, with the

option of linking every lot on artnet back to the same lot in

their own online catalogue. All upcoming sales are listed on our

Events page, and rank high in both artnet and external Google

search results. Auction House Partnerships also provides

reporting and direct traffic from artnet to the client’s.

The artnet Price Database, which is comprised of the Price

Database Fine Ar t and Design and the Pr ice Database

Decorative Art, is an online database of over 10 million color-

illustrated auction results from more than 1,700 leading interna-

tional auction houses. This product brings price transparency to

an otherwise inaccessible market. Subscribers to the database

receive access to upcoming auction information, recent auction

results, and auction records dating back to 1985, as well as

the most up-to-date and impartial appraisal value of artworks.

Subscribers include appraisers, dealers, auctioneers, financiers,

and private and government institutions (including the IRS and

the FBI). Most importantly, it provides an illustrated “blue book”

for private collectors with which to appraise the works they own,

and measure opportunities at upcoming auctions or on the

dealer market. Dealers and auctioneers also use comparable

sales from the Price Database to support the valuation and sale

of important works of art.

artnet Market Alerts, a derivative of the Price Database, informs

subscribers via email when artworks by their favorite artists

come up at auction, are featured in upcoming events, or are

offered in the Gallery Network or on artnet Auctions.

artnet Analytics Reports provides and visualizes art market infor-

mation that allows users to monitor the performance of artists

and art movements, customer-specified groups of artworks, and

art categories, with the option to compare market performance

against each other or financial indices, such as the Dow Jones or

the S&P 500, gold, or against other financial investments.

With artnet Auctions, artnet has become a leading trans-

action platform in the competitive online auction market. The

main advantages for buyers and sellers are the attractive prices

and fast turnaround, which can be finalized in a few weeks, as

compared to the six months or a year required by brick-and-

mortar art auctioneers. artnet Auctions routinely offers works by

blue-chip Modern and contemporary artists that sell in the five-

and six-figure range.

http://artnet.com

http://artnet.com/auctions

http://artnet.de

http://artnet.fr

http://news.artnet.com


15

artnet News was launched in February 2014, and is the world’s first

dedicated 24-hour international art market newswire. This platform

informs, engages, and connects members of the art community to

the events, trends, and people shaping the market and global art

industry through timely articles and insightful opinion pieces.

Objectives and Strategies

artnet will remain faithful to its founding mission to increase trans-

parency in the art market. Our goal is to maintain our leadership

position in the increasingly competitive online art market, where

we have operated for more than 25 years. artnet’s Management

team is confident that with constant product improvements and

innovations, we will continue to strengthen our brand.

Control System

A standardized controlling and reporting system has been put

into place for the value-based management of the Group and the

management of individual segments. For the individual segments,

the earnings before interest and taxes (EBIT) were compared to

budgets and numbers from previous years, and determined as

key financial data. Regarding the financial position, the Group

focuses on the availability of liquid assets.

Furthermore, leading economic indicators that may impact the

business are constantly monitored and evaluated. For the Gallery

Network and the Price Database products, these indicators

include the number of contract terminations and renewals, as

well as the additions of new contracts. For artnet Auctions, the

number of lots available, the number of lots sold, and average

prices are the measured indicators. Another essential aspect of

the management control system is the ongoing monitoring of web

traffic, in which important patterns are evaluated and analyzed.

artnet evaluates site visits on a daily, weekly, and monthly basis

to obtain information about the development of each individual

segment. This analysis continues to grow in importance for billing

advertising contracts based on traffic performance.

Research and Development

The artnet website forms the foundation of the Group’s products.

It is of the utmost importance to keep pace with the latest

developments in technology, and to develop new products that

increase benefits for customers. In this regard, our developers

use software based on Microsoft technology, which gives them

the flexibility required to adapt applications to our customers’

ever-changing needs. In 2015, the Product Development Team

focused mainly on expanding new technologies to increase

advertising revenue, without affecting the website’s usability

or our products’ functionality. In addition, the artnet News app

was developed and launched in December 2015.

2. Economic Report

2.1 Macroeconomic and Industry Conditions

Global Economic Situation

The global economy slowed down in 2015. While the economies

of industrial countries improved slightly, the economic growth

in developing and emerging markets slowed down for the fifth

consecutive year. Overall, the global economy was impacted by

declining consumer demand from China, lower oil prices, and the

more rigid monetary policy adopted by the FED.

Art Market Development

Though 2014 marked a record year of growth in the fine art auction

market, our data shows an overall contraction in the 2015 calendar

year. Global fine art sales brought in a collective 14.8 billion USD,

a decrease of 9% over the course of 2014, effectively returning

the market to its 2013 total of 14.5 billion USD. This performance

is in sharp contrast to the 156.4% increase we saw during the

2009–2014 period.

The United States was by far the strongest-performing market,

growing nearly 10% since 2014. By contrast, China’s auction sales

shrank by 30%, due in part to macroeconomic factors. Germany,

meanwhile, achieved 260 million USD in 2015, experiencing a near

6% loss in total sales value over 2014 with a decrease of 5% in lots

sold—its first down year since 2012.

2.2 Result of Operations, Financial Position, and Net Assets

artnet generates its revenue primarily in US dollars. The

headquarters of artnet’s subsidiary, Artnet Worldwide Corpo-

ration, is located in New York, the global center of the art market,


16

and thus incurs its expenses mainly in US dollars. As a result of

the significantly increased strength of the US dollar as compared

to the previous year, presenting this years’ results in US dollars is

more reflective of recent economic developments than presenting

in euros, as results in euros are strongly affected by exchange rate

fluctuations. Therefore, the performance of the Group is described

in US dollars, while the impact of the USD/euro currency exchange

will be described in a separate section.

Result of Operations

In the 2015 fiscal year, artnet has maintained its course of ongoing

growth. artnet had previously reached its highest revenue in the

Company’s history (18.5 million USD) in 2014, and revenue in the

current fiscal year increased again by 4% to 19.2 million USD.

Compared to the previous year, which was impacted by excep-

tional expense items, the operating result in 2015 increased to

785k USD from a negative operating result of -780k USD in 2014.

This significant turnaround was largely due to higher adver-

tising revenues, mainly coming from the artnet News and artnet

Galleries segments, as well as cost reductions for personnel and

administrative expenses. While the Price Database and Galleries

segments achieved positive results overall, the artnet News and

artnet Auctions segments have not yet generated a positive

contribution to profits.

Revenue Growth

Despite a challenging and competitive market environment,

artnet increased revenue to 19,184k USD in 2015. The predicted

revenue target (19 million USD to 20 million USD) was thus

achieved, and revenue in US dollars increased by 4% as

compared to the previous year.

In 2015, revenue from artnet Auctions reached 2,906k USD

as compared to 3,151k USD in 2014. The predicted revenue

increase of 10% was thus clearly missed, while the average buyer

and seller premiums of 22% remained constant as compared to

the previous year. The average price of lots sold in the fiscal

year decreased, from 9,578 USD to 7,948 USD, while the total

number of sold lots increased by 13%.

Revenue from the Gallery Network also decreased in the reporting

year as compared to 2014 by 9%, or 514k USD, from 5,942k USD

to 5,428k USD, mostly due to an ongoing decline in memberships.

The revenue reported in USD was additionally affected by the

fluctuating exchange rates of euro-generated revenue, amounting

to approximately 252k USD in 2015 and corresponding to 49% of

the total decline in revenue. A recently redesigned user interface

and improvements to customer service led to a reduced number

of cancellations, but the predicted stabilization of the number

of memberships and an increase in revenue has not yet been

achieved. Meanwhile, Auction House Partnerships has increas-

ingly established itself in the market, and showed a slight increase

in sales of 17 % to 477k USD.

Revenue for the Price Database decreased compared to the

previous year by 238k USD, from 7,469k USD to 7,231k USD.

However, when taking the currency conversion effect into an

account, revenue did increase in USD by 1%, with the currency

exchange rate effect of euro-generated revenue amounting to

307k USD in 2015. Despite the forecast of a slight growth in sales,

revenue for this product decreased slightly. The number of subscrip-

tions to the Price Database at the end of the year 2015 remained

constant as compared to the previous year, with an intended shift

to long-term subscriptions.

The predicted strong revenue growth for advertising has been

achieved. With an increase of 91%, the revenue almost doubled

from 1,894k USD to 3,619k USD. Overall, advertising revenue

benefitted from the redesign of the website and the addition of

new and attractive advertising placements, as well as the high

volume of visits brought in by artnet News. Advertising revenues

are allocated to the segment artnet News (47%), artnet Galleries

(41%), and artnet Price Database (12%).

Changes in Costs and Results

Gross profit increased to 12,567k USD, or by 14% as compared

to the previous year (11,062k USD). This was due to the increase

in revenue, savings in personnel and sales costs, and lower

depreciation and amortization.


17

Sales and marketing expenses in 2015 remained constant at

4,234k USD as compared to the previous year (4,231 USD).

While marketing expenses in the reporting period decreased by

308k USD, expenses for artnet News increased correspondingly.

During the previous year, artnet News was still in development

and not all positions were staffed, therefore personnel expenses

for the artnet News team in 2015 increased. Sales expenses

remained the same as compared to the previous year.

Expenses for product development increased in 2015 by 7%

to 3,518k USD as compared to the previous year (3,284k USD).

External development costs for the website redesign were

capitalized in 2014, while in 2015 development costs accrued

due to further improvements of the artnet Auctions platform, the

newly launched artnet News app, and the redesign of several

product pages. External development costs, and thus the risk of

overdependence on third parties, were continuously decreased

throughout the fiscal year, while internal personnel expenses in

this segment increased with the filling of vacant and new positions.

General and administrative expenses decreased to 3,934k

USD by 8% as compared to the previous year (4,255k USD) due

to lower legal expenses, consulting fees, travel, and internal

event expenses.

Development of Segments

At the beginning of the 2015 fiscal year, the Group adjusted

its segment reporting. As part of the modification of internal

reporting, the decision was made to disclose the online news

platform, artnet News, as its own segment. The number of

reportable segments has not increased, as Management no

longer considers appropriate the disclosure of advertising as a

standalone segment. Advertising revenue will now be allocated

to the segments where banners have been placed. In addition,

since the beginning of the 2015 fiscal year, the segment reporting

was changed to a multilevel Contribution Margin accounting

method. Following the requirements of IFRS 8 “Operating

Segments” (Management Approach), this realignment has retro-

actively led to a change in the segment report in 2014.

The Management controls the individual segments based of

the contribution margin II (with CM II equaling revenue minus

direct and indirect variable costs). Therefore, it will be presented

below as a segment result. Non-directly allocable expenses are

mainly allocated to reportable segments based on the number of

employees and revenue per reportable segment. The segment

reporting is presented in US dollars only, in accordance to

internal communication policy.

The Galleries and Price Database segments generated a positive

contribution margin II, wherein the Galleries segment increased by

32% to 4,230k USD, due to higher revenue and lower expenses

for product development, as compared to the previous year. The

CM II for the Price Database segment decreased slightly by 2% to

4,308k USD. The artnet News segment still generated a negative

contribution margin II of -807k USD. Compared to the previous

year (-1,295k USD), the CM II improved by 38% due to higher

revenues despite higher product development costs. CM II for the

Auctions segment deteriorated due to lower revenue and higher

personnel expenses by 381k USD to -738 USD.

Group Profit or Loss

After a substantial loss of -3,891k USD due to significant non-cash

effects in the amount of -3,057k USD in the previous year, artnet

generated a positive result after tax in the amount of 709k USD in

2015. Thus, the predicted increase in earnings to an income within

the range of 100k USD to 500k USD was clearly exceeded.

Currency Conversion and Profit Situation in Euros

Currency conversion in the consolidated statement of compre-

hensive income is based on the average exchange rate for the

period from January 1 to December 31, 2015. Throughout

2015, the average exchange rate was 0.901 USD/EUR, as

compared to 0.754 USD/EUR during the 2014 fiscal year. This

corresponds to a depreciation of the average exchange rate of

the euro by 19%. Currency conversion for the balance sheet

is based on the exchange rate at the end of the period. As of

December 31, 2015, the rate was 0.917 USD/EUR, as compared

to 0.823 USD/EUR on December 31, 2014. This corresponds to

an appreciation of 11% in euros.


18

artnet is subject to these exchange rate fluctuations because it

invoices in euros, US dollars, and British pounds, but conducts

most of its business in the United States. Approximately 20%

of the Group’s revenue is generated in euros, and due to the

weakness of the currency, changes in revenue and expenses in

euros are substantially higher than in US dollars.

With the significant devaluation of the euro against the US dollar

in 2015, the profitability of the Group in euros is affected signifi-

cantly by foreign currency exchange effects, as compared to the

previous year.

In euros, the Group’s revenue increased from approximately

13.9 million EUR to 17.3 million EUR in 2015, or approximately

24% as compared to approximately 4% in US dollars. All

product segments show a revenue growth in euros due to the

exchange rate.

Gross profit of sales, when reported in euros, increased by

3 million EUR (36 %) to 11.3 million EUR, while in US dollars,

this increase amounted to only 14%. Revenue and most of the

Group’s operating costs is obtained in US dollars, and therefore

operating expenses in euros increased by approximately 19%,

as compared to a slight decrease of 0.5% in US dollars. The

Group thus generated a positive operating profit of 707k EUR,

as compared to an operating loss of -588k EUR in the previous

year. In 2015, consolidated net income in euros amounted to

638k EUR, as compared to a loss of -3,047k EUR in the previous

year, due to non-cash effects in the amount of 2,412k EUR.

Financial Position

Operating cash flow increased to 235k USD (2014: -69k USD),

mainly due to realized profit. The cash outflow arising from the

reduction of liabilities and the increase in accounts receivable,

however, counteracted th is deve lopment. Rece ivables

increased due to higher advertising revenue in the last quarter

by 387k USD as compared to the previous year, while accounts

payables decreased by 421k USD. Consolidated results were

influenced by non-cash expenses in the previous year and,

despite the enormous deficit of 2014, the operative cash flow

was nearly balanced.

In 2015, cash outflow from investing activities amounted to

only 32k USD, and decreased significantly as compared to

the previous year (213k USD). Investments in intangible assets

related to the redesign of the website (178k USD) during 2014 led

to a higher cash outflow overall.

The 2015 cash outflow from financing activities amounted to

526k USD, as compared to 303k USD in the previous year,

and included repayments of liabilities due to finance leases

(276k USD) and the shareholder loan (250k USD).

Contrary to the forecast of a slight increase in cash and cash

equivalents, this position in the balance sheet decreased

from 1,436k USD on December 31, 2014 to 1,084k USD as

of the current balance sheet date. The decline in cash and

cash equivalents of 25% in US dollars was mainly due to the

reduction in current and non-current liabilities, while the Group

improved its net income.

In euros, the changes in cash flows from operating, investing,

and financing activities are similar to the US dollar f igures.

Due to the strength of the US dollar, cash and cash equiva-

lents in euros increased in the amount of 104k EUR. Therefore,

the liquidity portfolio of the Group decreased in euros from

1,181k EUR to 994k EUR, or by 16% as compared to the

previous year.

The cash investment policy for the Group is conservative and

based on short-term investments, al lowing all cash to be

liquid and available. As of December 31, 2015, the liquidity

per share totaled 0.20 USD (0.18 EUR) based on an average

of 5,552,986 shares in circulation, as compared to 0.26 USD

(0.21 EUR) on December 31, 2014.

Financial Status

Consol idated total assets amounted to 5,436k USD on

December 31, 2015, as compared to 5,625k USD as of

December 31, 2014, representing a decrease of 3%. This is

mainly the result of the planned reduction of tangible and intan-

gible assets. The decrease in cash and cash equivalents of the

Group is compensated by the increase of accounts receivable.


19

Accounts receivable increased by 387k USD to 1,387k USD at

the reporting date, due mainly to increased advertising revenues.

The Group’s non-current assets are primarily held in US dollars.

Fixed assets, which are comprised of intangible and tangible assets,

decreased by 296k USD to 1,266k USD. This decrease was due to

scheduled depreciation and amortization, which was partly offset

by necessary hardware and software renewals in the amount of

240k USD. These purchases were financed through new finance

lease agreements, and had only a small effect on liquidity.

The deferred tax assets, in particular those for anticipated future

tax benefits coming from tax losses carried forward for Artnet

Worldwide Corporation, have been set for the same amount

of 884k USD. In 2015, carried-forward losses have benefitted

partially from the achievement of a taxable profit of the subsidiary.

Therefore, the value of this balance sheet item has been confirmed.

For subsequent years, an ongoing increase of taxable profits of

Artnet Worldwide Corporation is assumed.

Total current liabilities and provisions decreased by 942k USD,

from 5,221k USD to 4,279k USD. This decrease of 18% was

mainly due to the reduction of accounts payable, the obligation

of finance leases, and the reduction of deferred revenue. Current

liabilities were further affected by the currency exchange rate-re-

lated decrease in provisions, as well as the shareholder loan

nominated in euros. These provisions included costs in the

amount of 950k EUR for potential indemnity payments to a

photographer and related legal costs in France (800k EUR) and

Germany (150k EUR). For more information regarding the details

of this provision, refer to the information provided in note 17 of the

consolidated financial notes section.

Meanwhile, long-term liabilities decreased in the reporting year

by 36% to 429k USD as of December 31, 2015. This decrease is

mainly due to the reclassification of the previous long-term amount

of the shareholder loan to the current liabilities. The delimitation

of the rent-free period of the lease in 2012 decreased slightly as

planned, and liabilities from finance leases and other long-term

liabilities increased slightly.

artnet Group’s consolidated equity amounted to 727k USD as

of December 31, 2015, due to the realized profit and positive

currency exchange effects. In the previous year, a negative Group

equity amounted to -272k USD.

The Price Database constitutes an intangible asset that has

been developed by the gathering of auction information, with

results dating back to 1985. This valuable asset to the Group

has not been attributed full-earning recognition on the balance

sheet due to accounting rules, however, balance sheet assets

would be substantial ly increased if this recognition were

allowed by law.

Non-Financial Performance Indicators

Employees

As of December 31, 2015, there were 113 full-time employees

in the Group, versus 118 in the previous year. Additionally, the

artnet Group had two part-time employees in 2015, as compared

to three in the previous year. In sales and other departments, the

Group employed 11 freelancers, as compared to 12 in 2014.

Personnel expenses totaled 12,255k USD, as compared to

12,483k USD in the previous year. While personnel expenses

in the costs of sales and general administrative costs were

reduced, personnel expenses in sales and marketing and for

product development arose in general due to new hires.

Other Non-financial Performance Indicators

The quality of our services and the associated satisfaction of

Gallery Network and Price Database clients are of the utmost

importance to our business. Criticism and reasons for contract

cancellations are evaluated for quality assurance purposes

through customer surveys, allowing us to respond to future

cancellations in a timely and targeted manner.

For the Gallery Network, monitoring and controlling indicators

include the number of contract cancellations and the number of

new contracts. In 2015, cancellations were reduced by approxi-

mately 23%, while new contracts decreased by 17% as compared

to 2014. Overall, the number of gallery members decreased by 75

to approximately 1,300. In addition, the number of inquiries sent

to galleries and auction houses through artnet is documented and,


20

as a result of the site redesign, these inquiries have more than

doubled in 2015, as compared to the previous year.

For the Price Database, the number of the different types of

subscriptions is closely monitored. In 2015, this number remained

stable as compared to 2014, with a shift towards annual and

higher-priced subscriptions. Furthermore, the number of newly

added auction results to the database is taken into consideration,

although these numbers depend on the number of auctions and

lots offered worldwide. In 2015, the number of auction results in

the Price Database exceeded 10 million.

For the monitoring and controlling of artnet Auctions, the number

of lots sold and their average prices are important indicators.

Compared to 2014, the number of lots sold increased by 13%,

while the average price per lot sold declined by 17%. Another

important performance indicator is the number of new registrants,

which increased by 124% as compared to 2014.

For the performance measurement of advertising campaigns on

artnet, indicators such as CPM (price for 1,000 impressions), impres-

sions (the frequency with which an ad is fetched from its source), and

viewabilty (the probability an ad is viewed) are evaluated.

The ongoing monitoring of web traffic is of the utmost importance

to artnet as it provides all its services online, with different figures

for the existing domains recorded and evaluated daily. Since

the launch of artnet News, the number of visits to artnet.com

increased by 28%. Compared to the previous year, the number of

visitors at artnet News increased by 91%.

3. Disclosure of Takeover Provisions

Composition of Capital Stock

artnet AG’s fully paid-in capital stock, as of December 31, 2015,

totaled an unchanged 5,631,067 EUR, and comprises 5,631,067

no-par value bearer shares based on a notional common stock of

1.00 EUR per share. These are registered shares.

Voting Limits or Assignment Limits

There are no restrictions on voting rights or transfer of these

shares.

Direct or Indirect Shareholdings which Exceed 10% of Voting

Rights

Direct or indirect shareholdings which exceed 10% of voting

rights for artnet AG are held by Galerie Neuendorf AG, Berlin, at

27.06 %, as of December 31, 2015.

Preferred Shares

There are no preferred shares.

Voting Rights Monitoring in the Event of Employee Holdings

Any employee with holdings in artnet AG is obliged to exercise

his or her control rights directly.

Appointment and Dismissal of Members of the Executive

Board, Amendments to the Articles of Incorporation

Members of the Superv isory Board are appointed and

dismissed according to §§ 84, 85 of the German Stock Corpo-

ration Act (AktG). The amendments to the Articles of Incorpo-

ration were made in accordance with §§ 133, 179 AktG.

Authorization of the Executive Board to Issue and

Repurchase Shares

Authorized Capital

The Shareholder’s Meeting of artnet AG on July 16, 2014 autho-

rized the Management Board, with the approval of the Super-

visory Board, to increase the subscribed capital of 2,800,000

new bearer shares by up to 2,800k EUR in exchange for cash

contributions, or contributions in kind (Authorized Capital 2014)

until July 15, 2019. No shares were issued from the authorized

capital so far.

Conditional Capital

As per the resolution of the Shareholder’s Meeting on

July 15, 2009, the registered capital was increased by up to

560,000 new no-par value shares (conditional capital 2009/I)

to the Company’s directors and management team members

of affiliated companies and employees of artnet AG. The autho-

rized conditional capital 2009/I expired during the previous fiscal

year. No shares have been issued from it.


21

In 2009, 2010, and 2014, 398,907 stock options were granted to

the Management and employees of the subsidiary Artnet Corp.

from the 2009 stock option program. As of now, none of these

options has been exercised. All of these 398,907 issued share

options can increase the conditional capital (conditional capital

2009/I) if they are exercised.

4. Declaration of Conformity with the German

Corporate Governance Code of § 161 AktG

The current Declaration of Compliance with the German

Corporate Governance Code according to § 161 of the

German Stock Corporation Act (AktG) can be viewed online at

artnet.com/investor-relations/declaration-of-compliance.

5. Remuneration Report

This remuneration report is based on the recommendations of

the German Corporate Governance Code. It summarizes the

principles that apply to defining the remuneration for artnet AG’s

Management Board, and explains the amount and structure of

the Management Board’s remuneration. In addition, it describes

the principles behind, and the amount of, the remuneration of

the Supervisory Board. Furthermore, the remuneration report

includes information that also forms part of the notes to the consol-

idated financial statements according to § 314 of the German

Commercial Code (HGB), or the Group Management according

to § 315 of the German Commercial Code (HGB).

5.1 Remuneration of the Management Board

Granted Remuneration, CEO Jacob Pabst

EUR 2014 2015

Granted Granted (Min) (Max)

Fixed Basic Remuneration 235,469 304,088 304,088 304,088

Remuneration in Kind 8,859 10,025 10,025 10,025

Total 244,327 314,112 314,112 314,112

Short-Term Remuneration – 25,000 – 304,088

Benefits – – – –

Total Remuneration 244,327 339,112 314,112 618,200

Paid, CEO Jacob Pabst

EUR 2014 2015

Fixed Basic Remuneration 235,469 304,088

Remuneration in Kind 8,859 10,025

Total 244,327 314,112

Short-Term Remuneration – –

Benefits – –

Total Remuneration 244,327 314,112

The Supervisory Board is responsible for setting the remuneration

of the Management Board. Setting remuneration for artnet AG’s

Management Board is based on the Company’s size and activities,

its economic and financial position, and the amount and structure

of remuneration for the Management Board at comparable

companies. Remuneration must be set such that it is competitive

in the international market for highly qualified executives, and that

it offers an incentive for successful work.

Jacob Pabst receives no remuneration from artnet AG. The

payment of his duties as a board member of artnet AG is compen-

sated with the remuneration for his role as CEO of Artnet Worldwide

Corporation. Both the management contract with artnet AG and

the employment contract with Artnet Worldwide Corporation were

extended on July 1, 2014 for two years, until July 1, 2016.

Remuneration for Jacob Pabst as a board member, comprised

of a fixed basic remuneration and a yearly variable compensation

component (short-term performance-related incentive (STI)), is

described below:

Fixed basic remuneration: The fixed remuneration is paid out as

a monthly salary. In the first year of the contract, a basic remuner-

ation of 27,083 USD per month, or 325k USD per year, is paid. In

the second year of the contract, the basic remuneration increases

to 29,167 USD per month, or 350k USD per year. In addition,

the Company continues to pay health insurance in the amount

of 450 EUR per month, and the costs of the Company’s group

medical plan. The Company has taken out accident insurance with

coverage for invalidity (300k EUR) and death (150k EUR). In the

2015 fiscal year, the fixed cash remuneration of the Management

Board member, Jacob Pabst, totaled 314,112 EUR (342,633 USD).

The increase of the fixed remuneration is mainly due to currency

exchange effects related to the strong US dollar. In US dollars, the

http://artnet.com/investor-relations/declaration-of-compliance


22

remuneration increased according to the contract by 5.7% from

324,257 to 342,633 USD.

Variable compensation component (STI): In addition to the fixed

basic remuneration, the Management Board receives a variable

compensation component. The amount of this component is at

the discretion of the Supervisory Board. The basis for calculation

of this component is the consolidated financial statement of the

year, in which the variable compensation component is paid. The

variable remuneration component should not exceed the fixed

basic remuneration. The variable remuneration component is

dependent on one third of each of the following objectives:

• 1/3 of the achievement of the budgeted net income and cash

flow

• 1/3 of the share price performance of artnet AG

• 1/3 of the discretion of the Supervisory Board, based, in

particular, on long-term goals, such as the introduction of

new products or new business areas, expected profitability in

the future, and significant transactions

The variable remuneration component will be, as far as granted,

paid in 10 equal monthly installments, starting in the month in

which it was granted. In 2015, the Supervisory Board considered

a variable compensation in the amount of 25,000 EUR based on

performance goals and cash flow as appropriate.

5.2 Remuneration of the Supervisory Board

The remuneration of the Supervisory Board is defined by the General

Meeting based on a proposal by the Management Board and the

Supervisory Board. It is regulated in the articles of incorporation.

Remuneration of the Supervisory Board is based on the

Company’s size, the tasks and responsibilities of the members of

the Supervisory Board, and the Company’s economic situation

and performance.

The members of the Supervisory Board receive a fixed remuner-

ation every year. The chairman of the Supervisory Board receives

50,000 EUR, the deputy chairman receives 37,500 EUR, and the

third member of the Supervisory Board receives 25,000 EUR.

6. Risk and Opportunity Report

6.1 Risk Report

Risk Management

The artnet Group has introduced a risk management system

to identify and constantly monitor the Group’s operating and

financial risks. This system, which aims to alleviate the impact of

any unforeseen events, is largely comprised of the following four

components:

• Finance, which monitors the actual results of business activ-

ities, provides forecast/actual comparisons as part of monthly

reporting, and provides comparisons with the previous year

• IT infrastructure, which ensures and monitors the 24/7

availability and functionality of the website

• Project management, which monitors the development and

progress of the individual technology projects

• Ongoing traffic monitoring, which evaluates and tracks the

key areas of web traffic

The risk management system ensures that critical information is

passed on to the Group’s Management Board directly and in a

timely manner.

Early Warning System Ensures Identification of Potential Risks

As a rule, in order to measure, monitor, and control its business

growth and risks, the artnet Group uses a management and

control system which is mostly based on financial accounting data.

The risk inventory, which is developed based on this document,

lists the key existing threats and allocates levels of responsibility

within the artnet Group. Existing risk potential is observed on an

ongoing basis; suitable activities to limit risks are put in place

whenever possible. The risk management system includes regular

internal reporting on the course of business, current market devel-

opments, and customer relationships, as well as a Group-wide

budget process which deals with operating risks and changes in

the business environment. This process is supported by regular

analysis of the market and competition.


23

Dealing with Major Potential Risks

Operative Management is directly responsible for the early recog-

nition, control, and communication of risks. As a result, the artnet

Group can react to potential risks in a comprehensive and targeted

manner. Risk policy is geared to generate sustained growth and

secure enterprise value over the long term, and to avoid any

reasonable risks.

Accounting-Related Internal Control System with

Regard to the Group Accounting Process

The Management Board has set up an internal control system for the

wide range of organizational, technical, and economic workflows in

the Group. A key competency is the principle of the segregation of

duties, which aims to ensure that executive (e.g. sales), recording

(e.g. Accounting), and administrative (e.g. IT administration) depart-

ments are not united in the same place. The principle of dual control

ensures that no material workflows go uncontrolled.

Expectations of the Management Board are defined and documented

by regular, targeted agreements. The implemented risk management

system ensures that critical information and data will pass directly to

the Management.

The preparation of the consolidated financial statement was made by

the finance director of Artnet Worldwide Corporation, who has many

years of experience and special expertise in consolidation issues.

Risks

The Group has identified the following risks:

External Risks

Art Market Economic Trends

artnet is subject to fluctuations in the art market. As the market is

constantly impacted by the changing conditions of domestic and

global economies, the extent to which these developments will

also impact the art market in the future is unclear.

Operating Risks

IT System Infrastructure

Interruptions to the website’s functions can reduce artnet’s

ongoing revenues and profits, and could also impact future

revenue and earnings. Frequent or sustained interruptions to

service could cause existing or interested users to consider the

Group’s systems as unreliable, thus having a negative impact on

the Group’s overall image and reputation. Any such interruption

increases the work required by the IT Department, which, in turn,

leads to delays in launching new functions and services. Even

though the Group’s systems have been designed so that periods

of interruption in the event of a power outage or catastrophe

are low, they remain susceptible to damage or disruption from

flooding, fire, and power outages, or interruptions to telecommu-

nications services due to terrorist attacks, computer viruses, or

other unforeseen events. That being said, artnet’s web servers

are located in an extremely secure external facility.

Product Development

artnet’s future success depends on how fast the Group can

adjust to technological changes and new industry standards.

The Management Board intends to further improve the function-

ality and reliability of the website, and to launch new products

that benefit both existing and potential customers. The Group

observes market trends and focuses on product development,

reinforcing the importance of the Development Team over the

past few years. The recent staff increases will allow artnet to

meet its customers’ growing needs, and to increase growth

potential by launching new products.

There is always the risk that product innovations and further

product developments will not be immediately accepted by

users, and that the associated goals will not be met. In the case

of achieving lower revenue, artnet’s results of operations would

be impacted by increasing costs of product development and

higher ongoing costs.

There are also risks in product development due to a growing

number of Internet startups entering the market, many of which

are directly competing with one or more of our product segments.

Traffic to the Website

Website visits (traffic) are of key importance to artnet, and a

downturn in visitor numbers could lead to reduced revenue

for all products. artnet monitors traffic on a daily, weekly, and

monthly basis in order to ensure that traffic meets expectations.


24

To further increase visits to the site, the Group requires a larger

financial commitment to advertising and marketing. Whenever

possible, artnet monitors visitor numbers and revenue generated

through the website, and compares these numbers with the

corresponding advertising and marketing expenses in order to

assess the success of advertising and marketing activities.

Legal Risks

Trademark Laws

artnet protects itself through the trademark of the artnet name

in the Group’s key market areas, in particular, the United States,

Germany, France, and the European Union. Trademark infringe-

ments are costly and are subject to review from national author-

ities, which can result in a negative outcome for the Group.

Additionally, the Group must defend itself against copyright and

other legal claims, which could also result in a negative outcome

for the Group.

Copyright Laws

artnet uses a number of photographs of decorative art objects

in its database, and, as an international company, is exposed

to different regulations for copyright protection. For this reason,

artnet agreed on a license contract with the Copyright Collective

Bild-Kunst in Germany and the Artist Rights Society in the

United States. However, these contracts do not cover all rights

for all images used in the database. In response to a French

photographer who sued artnet in both French and German

courts over his rights as the creator of photographs taken for

an auction catalogue, and which were subsequently used in the

Price Database Decorative Art, artnet will take legal action and

all necessary contractual steps to avoid future lawsuits. It cannot

be ruled out that other photographers, especially in France, may

file similar lawsuits. This could have a significant impact on net

assets, financial position, and results of operations.

Protection of Customer Data

artnet stores customer data in compliance with all current laws

and regulations. However, if a third party were to succeed in

bypassing the artnet security measures and obtain customer

information, artnet could be liable for any damages incurred.

Financial Risk

Foreign Currency Fluctuation, Default, and Liquidity Risks

artnet conducts a portion of its business outside of the United States,

thereby facing exposure to adverse movements in currency exchange

rates. As exchange rates are subject to fluctuation, revenues and

operating expenses may differ substantially from expectations. artnet

does not currently engage in exchange rate hedging against these

risks. Instead, the Group accepts payments from customers in euros

and British pounds, and pays their suppliers in Europe in these

currencies. This reduces the exchange rate risks.

Due to the intragroup loan in which the parent company, artnet AG

based in the Eurozone, is financed by its US based subsidiary, as

well due to its euro-nominated bank accounts, Artnet Worldwide

Corp., faces a currency exchange risk. Currency translation

adjustments arising from the valuation of intercompany long-term

loan receivables, which qualify as part of a net investment, are

not reflected in the profit or loss of the Group, but are recognized

in the other comprehensive income and will be accumulated in a

separate component of equity until full or partial disposal of artnet

AG ownership interest in Artnet Corp. The Board desists from a

hedge of this foreign currency risk due to reasons of efficiency.

artnet has no significant concentration of default risk for financial

assets because the exposure is averaged over a large number of

customers, including individuals and entities dealing in the fine

art market. Nevertheless, the global economic downturn could

negatively influence the solvency of the Group’s customers,

leading to an increase in the average credit period, or, at worst,

leading to an increase in customer default. This would negatively

affect the Group’s earnings, as well as its financial position.

artnet attempts to counter such risks by insisting on upfront

payments from customers whenever possible.

Liquidity risk represents the instance where artnet might be

unable to meet deadlines to make due payments. artnet is

settling its current costs and investments from existing cash

on hand and cash flow operations, and has no lines of credit.

In 2015, cash and cash equivalents decreased mainly due

to the lowering of open accounts payable, as well as the

redemption of leasing and loan liabilities.


25

The March 2015 ruling by the French Court of Appeal, in conn ect-

ion to the alleged violation of copyright of a French photog-

rapher for h igh indemni t y payments in the amount of

0.8 mil l ion EUR, could eventually lead to counter-l iquidity

risks if the amount is required to be paid on short notice.

artnet continues to take legal action against this judgment. On

May 25, 2015 artnet appealed this decision. In March 2016,

the French Court of Cassation ruled in favor of the French

photographer on a procedural aspect, without considering

the arguments that artnet formed to challenge the grounds

of the ruling from the Court of Appeal. A reregistration of the

case depends on a full or partial payment of the compensation

of 0.8 million EUR. Currently, artnet is carefully evaluating all

options to prevent the enforcement of the ruling in Germany

and the United States. The provision made for this case as of

December 31, 2015 has not changed. The provision covers

the maximum risk of this trial.

The German Court in the same matter has yet to render its

decision, and is not expected before mid-2016. artnet reserves

its rights to appeal against the decision. A provision including

legal costs amounting 150k EUR for the German lawsuit was

also made in the previous year. The risk evaluation has not

changed since last year, as there were no new facts available at

the closing date.

Aside from all legal remedies, artnet continues its efforts to

achieve a settlement with the French photographer. Considering

all its options, artnet does not believe a full payment of damages

will be required in 2016.

As the artnet Group only has interest-bearing debts in the form

of finance leases and shareholder loans, the risk of changes to

interest rates is to be regarded as insignificant.

Other Risks

Key Employees

The market for skilled and motivated managers is highly compet-

itive. As a result of artnet’s relatively small size, the loss of

employees in key positions could have a significant impact on the

Company’s day-to-day operations.

There is always the possibility that the above list does not

outline all risks to which artnet is exposed. Unrecognized and

unreported risks could arise, negatively impacting business

performance. The Group continues to monitor its environment

and review the effectiveness of the risk management systems.

Despite continuous adjustments to the risk management system,

it is not possible to entirely quantify the probability of all risks or

their financial impact.

6.2 Opportunities

The online art market is characterized by a dynamic environment,

with constant opportunities for artnet. The size of the Company

and short decision-making processes allow us to respond

quickly to changing circumstances and trend reversals, weighing

the potential risks. Opportunities may arise from the internal or

external environment.

The development of the international art market is closely linked

to the economy of industrial countries. Changes in economic

circumstances will have an impact on our business activities. If

the global economy, and, in particular, the European economy,

recovers more sustainably than expected, this could have a

positive effect on our earnings.

The conf idence of buyers and sellers in the Internet as a

transaction platform is growing steadily, including confidence

in transactions for high-priced artworks. In the coming years,

the online sector of the art market is expected to grow by a

double-digit percentage rate, reaching 10 billion EUR by 2020.

If this sector grows faster than currently expected, we could

surpass our midterm projections, particularly those in the

Auctions segment.

The Company’s success depends, to a large extent, on our

ability to provide our customers with innovative solutions and

improved products. Thus, we continue to increase the effec-

tiveness of our products and implement website developments.

Of course, if we are able to progress faster than is currently

expected, we would be able to implement product improve-

ments more quickly, and this could have a positive effect on our

revenue and earnings.


26

The 2014 launch of artnet News adds to artnet’s current product

package. The launch of the artnet News app for iPhone supple-

mented the coverage of artnet News, and will help to increase

brand awareness and the number of unique visitors to our website.

This addition already had a positive impact on the number of

visitors and, as a result of the higher traffic on artnet websites, the

revenue from advertising increased as compared to last year.

7. Subsequent Report

In March 2016, the French Court of Cassation rendered its

decision in a lawsuit of a French photographer versus artnet AG,

artnet France Sarl, and Artnet Worldwide Corp. concerning his

claim of a violation of copyright. Based on procedural aspects of

the case, the French Court of Cassation has ruled in favor of the

French photographer.

In the previous level of jurisdiction, the Paris Court of Appeal had

ordered artnet AG, artnet France Sarl, and Artnet Worldwide

Corp. to pay 764,412 EUR to Mr. Briolant, and held that artnet

AG, artnet France Sarl, and Artnet Worldwide Corp. are jointly

and severally liable. The appeal filed against this judgment

by artnet AG, artnet France Sarl, and Artnet Worldwide Corp.

intended to obtain a cancellation of this ruling by the Court of

Cassation, and sought to have the entire case reviewed by a

different Court of Appeal. However, the French photographer

filed a motion claiming that this appeal cannot be processed by

the Court of Cassation for failure to meet certain prerequisites

with respect to the enforcement of the ruling from the Court of

Appeal. This motion was argued by the parties before the court

in a hearing which led to a pre-trial ruling in favor of the motion

of the French photographer.

Consequently, the pre-trial ruling is not based on any consider-

ation of the arguments that artnet AG, artnet France Sarl, and

Artnet Worldwide Corp. formed to challenge the grounds of the

ruling from the Court of Appeal. The Court of Cassation could

reregister the case if all or part of the above mentioned compen-

sations are paid within a two-year period.

The Company will carefully evaluate its legal options and all other

available means concerning this matter.

No other reportable events of significance for the net assets,

financial position, and results of the artnet Group have occurred

after the balance sheet date.

8. Outlook

The following report describes forecasts made by the Management

Board regarding the future performance of artnet’s segments and

general business. The actual business performance may differ in

a positive or negative way from these forecasts due to the occur-

rence of risks and opportunities, as described in the Risk and

Opportunity Report.

In 2016, artnet is poised to continue its leading position in

an ongoing competitive market, taking advantage of the

ever-growing popularity of artnet News. Bringing timely articles,

opinion pieces, and trend reports to the ar t world since

December 2015, readership has recently expanded even further

with the release of the artnet News iPhone app, whose growing

popularity is projected to increase the number of visitors and

pageviews significantly. In addition, an Android app is currently

in development and will be made available within the first half of

2016. These improvements will have a positive impact on adver-

tising revenue (which is not limited to the artnet News segment),

and a strong revenue growth for artnet News is projected during

the 2016 fiscal year.

The number of subscriptions to the Price Database stabilized in

2015, revealing a shift to long-term and higher-priced subscrip-

tions. The Management expects that this trend will continue in

2016, and that the Price Database segment will show a slight

increase in revenue.

In 2015, the Gallery Network member sites underwent a redesign,

creating, among other benefits, a double in the number of

inquiries sent to galleries and auction houses, as well as a higher

level of satisfaction reported by our clients. In this competitive

market, the Management expects the number of memberships

to stabilize. Due to an anticipated revenue increase for Auction

House Partnerships and an increase of advertising revenue for

the Galleries segment, a slight increase in revenue is expected

for this segment.


27

Jacob Pabst

CEO, artnet AG


Thanks to the continued acceptance of the online auction market,

artnet Auctions will play an even more important role in the art

world as higher-priced artworks become more prevalent. Growing

interest in online auctions has led to a significant increase in the

registrations of new buyers and sellers to this platform in 2015.

The Management expects to profit from this trend, and forecasts

a significant revenue growth for artnet Auctions.

Due to the expectations for individual segments outlined

above, the Management predicts a revenue increase of 20 to

21 million USD (18 to 19 million EUR) and profit after tax of

1.0 to 1.3 million USD (0.9 to 1.2 million EUR) for 2016. With the

forecast revenue and planned expenses, cash and cash equiv-

alents are expected to show a slight increase as compared to

December 31, 2015.


28

Consolidated Financial Statements as of December 31, 2015


29

Notes No.

12/31/2015

USD .

12/31/2014

USD .

12/31/2015

EUR .

12/31/2014

EUR .

Assets

Current Assets

Cash and Cash Equivalents 3 1,083,526 1,435,839 993,593 1,181,121

Trade Receivables 4 1,387,025 999,922 1,271,902 822,536

Other Current Assets 5 426,504 353,743 391,104 290,989

Total Current Assets 2,897,055 2,789,504 2,656,599 2,294,646

Non-Current Assets

Property, Plant, and Equipment 6 712,176 773,136 653,065 635,982

Intangible Assets 7 553,800 788,968 507,835 649,005

Security Deposits 388,361 388,845 356,127 319,864

Deferred Tax Assets 8 884,432 884,432 811,024 727,534

Total Non-Current Assets 2,538,769 2,835,381 2,328,051 2,332,385

Total Assets 5,435,824 5,624,885 4,984,650 4,627,031

Equity and Liabilities

Current Liabilities

Accounts Payable 9 299,425 720,760 274,573 592,897

Accrued Expenses and Other Liabilities 10 749,348 705,878 687,152 580,655

Provisions 11 1,035,987 1,319,644 950,000 1,085,540

Short-Term Liabilities from Finance Leases 12 131,362 225,401 120,459 185,415

Deferred Revenue 14 1,742,160 1,880,882 1,597,561 1,547,214

Loans 27 320,961 368,750 294,321 303,334

Total Current Liabilities 4,279,243 5,221,315 3,924,066 4,295,055

Long-Term Liabilities

Office Rent Amortization 13 330,141 375,930 302,739 309,240

Long-Term Liabilities from Finance Leases 12 81,312 56,014 74,563 46,077

Loans 27 – 243,132 – 200,000

Other Long-Term Liabilities 18 17,834 – 16,354 –

Total Long-Term Liabilities 429,287 675,076 393,656 555,317

Total Liabilities 4,708,530 5,896,391 4,317,722 4,850,372

Shareholders’ Equity

Common Stock 15 5,941,512 5,941,512 5,631,067 5,631,067

Treasury Stock 15 (269,241) (269,241) (264,425) (264,425)

Additional Paid-In Capital 52,404,326 52,325,939 50,997,910 50,927,279

Accumulated Deficit (58,762,833) (54,872,246) (56,916,361) (53,868,969)

Current Net Profit 709,155 (3,890,587) 638,949 (3,047,392)

Foreign Currency Translation 704,375 493,117 579,788 399,099

Total Shareholders’ Equity 727,294 (271,506) 666,928 (223,341)

Total Liabilities and Shareholders’ Equity 5,435,824 5,624,885 4,984,650 4,627,031

artnet AG Consolidated Balance SheetAs of December 31, 2015


30

Notes No.

2015 .

USD .

2014 .

USD .

2015 .

EUR .

2014 .

EUR .

Revenue

Gallery Network 5,428,160 5,941,627 4,890,772 4,477,016

Price Database 7,231,242 7,469,366 6,515,349 5,628,167

Advertising 3,618,644 1,894,422 3,260,398 1,427,447

Auctions 2,905,750 3,150,649 2,618,081 2,374,014

Total Revenue 24 19,183,796 18,456,064 17,284,600 13,906,644

Cost of Sales 6,616,792 7,393,886 5,961,730 5,571,293

Gross Profit 12,567,004 11,062,178 11,322,870 8,335,351

Operating Expenses

Sales and Marketing 4,233,544 4,231,219 3,814,423 3,188,224

General Administrative 3,933,670 4,254,590 3,544,237 3,205,834

Product Development 3,518,373 3,283,789 3,170,054 2,474,335

Non-Cash Compensation 18 96,221 73,112 86,695 55,090

Total Operating Expenses 11,781,808 11,842,710 10,615,409 8,923,482

Operating Income 785,196 (780,532) 707,461 (588,131)

Interest Expenses 22 32,037 68,274 28,865 51,444

Interest Income 22 820 58 739 44

Extraordinary Depreciation – 653,192 – 537,316

Other Income/(Expenses) 22 (9,150) (93,545) (8,244) (70,486)

Provision for Litigation Risks 22 – 1,260,783 – 950,000

Earnings Before Taxes 744,829 (2,856,268) 671,091 (2,197,333)

Income Taxes 8 (35,674) (11,174) (32,142) (8,420)

Deferred Tax Benefit/(Expense) – (1,023,145) – (841,639)

Total Taxes (35,674) (1,034,319) (32,142) (850,059)

Net Profit/(Loss) 709,155 (3,890,587) 638,949 (3,047,392)

Other Comprehensive Income

OCI Recycled:

Differences from Foreign Currency Translation 211,258 497,777 180,689 554,967

Total Comprehensive Income 920,413 (3,392,810) 819,638 (2,492,425)

Result per Share

Basic and Diluted 21 0.13 (0.70) 0.12 (0.55)

artnet AG Consolidated Income StatementFor the Fiscal Year from January 1 to December 31, 2015


31

Common Stock

Issued Shares Amount Treasury Stock

Additional

Paid-In Capital

Accumulated

Deficit

Foreign Currency

Translation Total

Balance as of 12/31/2013 5,631,067 5,631,067 (264,425) 50,872,189 (53,868,969) (155,868) 2,213,994

Net Income/(Loss) – – – – (3,047,392) 554,967 (2,492,425)

Remuneration from Stock Options – – – 55,090 – – 55,090

Balance as of 12/31/2014 5,631,067 5,631,067 (264,425) 50,927,279 (56,916,361) 399,099 (223,341)

Net Income/(Loss) – – – – 638,949 180,689 819,638


Balance as of 12/31/2015 5,631,067 5,631,067 (264,425) 50,997,910 (56,277,412) 579,788 666,928

Common Stock

Issued Shares Amount Treasury Stock

Additional

Paid-In Capital

Accumulated

Deficit

Foreign Currency

Translation Total

Balance as of 12/31/2013 5,631,067 5,941,512 (269,241) 52,252,827 (54,872,246) (4,660) 3,048,192

Net Income/(Loss) – – – – (3,890,587) 497,777 (3,392,810)


Balance as of 12/31/2014 5,631,067 5,941,512 (269,241) 52,325,939 (58,762,833) 493,117 (271,506)

Net Income/(Loss) – – – – 709,155 211,258 920,413


Balance as of 12/31/2015 5,631,067 5,941,512 (269,241) 52,404,326 (58,053,678) 704,375 727,294

artnet AG Consolidated Statement of Changes in Shareholders Equity (USD)For the Fiscal Year from January 1 to December 31, 2015

artnet AG Consolidated Statement of Changes in Shareholders Equity (EUR)For the Fiscal Year from January 1 to December 31, 2015


32

Notes No.

2015 .

USD .

2014 .

USD .

2015 .

EUR .

2014 .

EUR .

Cash Flow from Operating Activities

Net Profit/Loss 709,155 (3,890,587) 638,949 (3,047,392)

Adjustments to Reconcile Net Profit to Net Cash

Provided by/(used in) Operating Activities

Depreciation and Amortization 6,7,22 531,468 1,283,299 478,852 944,934

Impairments/Write-Offs for Receivables 4 301,093 (161,234) 271,285 (121,490)

Changes in Deferred Tax Assets 8 – 1,023,145 – 841,639

Non-Cash Compensation from Stock Options 18 78,387 73,112 70,627 55,090

Other Non-Cash Transactions 57,898 492,924 52,166 438,587

Changes in Operating Assets and Liabilities

Trade Receivables 4 (688,196) 28,957 (620,065) 21,819

Other Current Assets 5 (72,761) 54,457 (65,558) 41,033

Security Deposits 484 (2,678) 436 (2,018)

Accounts Payable 9 (421,335) 79,593 (379,623) 59,973

Provisions 11 (120,645) 1,154,874 (108,701) 870,198

Accrued Expenses and Tax Liabilities 10 (2,319) (122,591) (2,090) (92,372)

Deferred Revenue 14 (138,722) (81,941) (124,989) (61,743)

Total Adjustments (474,648) 3,821,917 (427,660) 2,995,650

Cash Flow Provided by/(used in) Operating Activities 234,507 (68,669) 211,289 (51,742)

Cash Flow from Investing Activities

Purchase of Property and Equipment 6,12 (24,695) (35,536) (22,645) (26,776)

Purchase and Development of Intangible Assets 7,12 (7,616) (177,961) (6,983) (134,094)

Cash Flow Used in Investing Activities (32,310) (213,497) (29,628) (160,870)

Cash Flow from Financing Activities

Repayment of Finance Leases 12 (275,786) (302,796) (248,483) (228,157)

Loan Payments 27 (249,723) – (225,000) –

Cash Flow Used in Financing Activities (525,509) (302,796) (473,483) (228,157)

Effects of Exchange Rate Changes on Cash (29,001) (83,976) 104,294 93,127

Changes in Cash and Cash Equivalents (352,313) (668,939) (187,528) (347,642)

Cash and Cash Equivalents—Start of Period 3 1,435,839 2,104,778 1,181,121 1,528,763

Cash and Cash Equivalents—End of Period 3 1,083,526 1,435,839 993,593 1,181,121

Supplemental Disclosures of Cash Flow

Income Tax Receipts/(Payments) 8 (20,873) (9,531) (18,807) (7,182)

Interest Payments 22 (14,293) (63,849) (12,878) (48,110)

Interest Receipts 22 820 58 739 44

artnet AG Consolidated Statement of Cash FlowsFor the Fiscal Year/Period from January 1 to December 31, 2015


33

Notes to the Consolidated Financial Statements 2015

Table of Contents

1. Corporate Information and Statement of Compliance ...................................................................................................................... 34

2. Summary of Significant Accounting Policies ..................................................................................................................................... 34

3. Cash and Cash Equivalents and Explanation of Consolidated Statement of Cash Flow .................................................................... 37

4. Accounts Receivable ....................................................................................................................................................................... 37

5. Other Current Assets ...................................................................................................................................................................... 38

6. Tangible Assets ............................................................................................................................................................................... 38

7. Intangible Assets ............................................................................................................................................................................. 38

8. Taxes and Deferred Taxes ............................................................................................................................................................... 39

9. Accounts Payable ........................................................................................................................................................................... 40

10. Accruals and Other Liabilities ........................................................................................................................................................ 40

11. Provisions ..................................................................................................................................................................................... 41

12. Liabilities from Finance Leases ...................................................................................................................................................... 41

13. Deferred Rent Incentive ................................................................................................................................................................. 41

14. Deferred Revenue and Revenue Recognition ................................................................................................................................. 41

15. Equity ........................................................................................................................................................................................... 42

16. Capital Management ..................................................................................................................................................................... 43

17. Financial Instruments and Risks Arising from Financial Instruments ................................................................................................ 43

18. Share-Based Remuneration .......................................................................................................................................................... 45

19. Personnel Expenses ...................................................................................................................................................................... 46

20. Defined Contribution Plans ............................................................................................................................................................ 47

21. Earnings per Share ....................................................................................................................................................................... 47

22. Other Disclosures on the Consolidated Statement of Comprehensive Income ................................................................................ 47

23. Segment Reporting ....................................................................................................................................................................... 48

24. Information by Geographic Region ................................................................................................................................................ 49

25. Operating Leases .......................................................................................................................................................................... 50

26. Auditor’s Fees ............................................................................................................................................................................... 50

27. Related-Party Transactions ............................................................................................................................................................ 50

28. Accounting Estimates and Judgments ........................................................................................................................................... 51

29. Significant Events After the Balance Sheet Date ............................................................................................................................ 51

30. Notifications According to the Wertpapierhandelsgesetz (WpHG - German Securities Trading Act) ................................................. 52


34

1. Corporate Information and Statement of Compliance

artnet AG (hereinafter referred to as “artnet AG” or the “Company”)

is a publicly traded corporation headquartered in Berlin, Germany.

The address of its registered office is Oranienstraße 164, 10969

Berlin, Germany.

artnet AG holds 100% of the shares in Artnet Worldwide Corpo-

ration (“Artnet Corp.”), which is located in New York, NY, USA.

Artnet Corp. holds 100% of the shares in artnet UK Ltd. and

artnet France Sarl. artnet AG and Artnet Corp., together with the

latter’s wholly owned subsidiaries, are referred to as the “artnet

Group” or the “Group.”

The Group’s goal is to provide ar t col lectors, gal ler ies,

publishers, auction houses, and art enthusiasts with a website

to research artists and art prices. Users can find artworks that

are currently available for sale in the Gallery Network, Auction

House Partnerships, or on artnet Auctions, an online trans-

action platform for buying and selling art. artnet News, the

24-hour newswire, informs users about the events, trends, and

people shaping the global art market.

Applying § 315a of the German Commercial Code (HGB),

accompanying the consolidated financial statements as of

December 31, 2015, financial statements for the parent and

subsidiary companies were prepared in accordance with Interna-

tional Financial Reporting Standards (IFRS) and its interpretations

of the International Accounting Standards Board (IASB) effective

within the EU. The consolidated financial statements were autho-

rized for issuance by the CEO on March 17, 2016.

2. Summary of Significant Accounting Policies

Basis of Accounting and Reporting Currency

Amounts included in the consolidated financial statements and

notes to the consolidated financial statements are stated in euros

(EUR) as required by German law, unless otherwise noted. The

reporting currency is the euro.

Due to rounding, amounts presented may not add up precisely.

The currency of the primary economic environment in which

artnet operates is US dollars. For convenience, especially for

our US-based investors, the consolidated statement of financial

position, statement of comprehensive income, cash flow statement,

and statement of changes in equity are also presented in US dollars.

The consolidated financial statements have been prepared on a

historical cost basis. The balance sheet date is December 31, 2015.

The principal accounting policies adopted are set out below.

The consolidated financial statements as of December 31, 2015

have been prepared under the assumption that the Company

will continue operations, as the Company assumes that the due

payment obligations in 2016 can be fulfilled. Due to planned

measures against the enforcement of the French ruling, artnet

assumes no full cash outflows for the claimed damage. For the

German lawsuit in the same matter, due to planned legal remedies,

artnet does not expect to make any payments during the 2016

fiscal year. The potential liquidity risk related to ongoing litigations

on the subject of copyright infringement is explained in detail in

the liquidity risk section in the Group Management Report 2015.

Basis of Consolidation and Consolidated Companies

The consolidated financial statements include the parent company,

artnet AG, as its wholly owned subsidiary, and Artnet Worldwide

Corporation, as the subsidiaries of the Company. A company deter-

mines whether it is a parent by assessing whether it controls one or

more investees. A company considers all relevant facts and circum-

stances when assessing whether it controls an investee. A company

controls an investee when it is exposed, or has rights, to variable

returns from its involvement with the investee and has the ability to

affect those returns through its power over the investee. artnet AG

has the power to govern the financial and operating policies of an

entity so as to obtain benefits from its activities. An investor must

be exposed, or have rights to variable returns from involvement with

an investee, to control the investee. Such returns must have the

potential to vary as a result of the investee’s performance and can

be positive, negative, or both. Variable returns include dividends,

fixed and variable interest rates, fees and charges, fluctuations in

the value of investments, and other economic benefits.

On February 23, 1999, artnet AG entered into a transaction with

Artnet Corp., which was treated as a recapitalization of Artnet


35

Corp., with Artnet Corp. as the acquirer of artnet AG. The Company

accounted for the business combination of artnet AG and Artnet

Corp. as a reverse acquisition in accordance with IFRS 2, B1 et seq.

On November 1, 2007, Artnet Corp. established artnet UK Ltd.,

which is a wholly owned subsidiary of Artnet Corp. artnet UK Ltd.

conducts sales and provides customer support for Artnet Corp. in

the United Kingdom.

The active business operations of artnet France Sarl, a wholly

owned subsidiary of Artnet Corp., was closed in June 2012.

All significant intercompany transactions, balances, income, and

expenses are eliminated in full on consolidation.

Reporting Period

The consol idated f inanc ia l statements were prepared

for the repor ting per iod, from January 1, 2015 through

December 31, 2015. The financial year for all Group companies

coincides with the calendar year.

Accounting Principles of General Importance for artnet

artnet has reviewed its notes for the 2015 fiscal year in accordance

to the specifications of IASB on essentiality and relevance. The

following section about the accounting principles was shortened

significantly. Further explanations to individual balance sheet

items can be found in the notes items and explanations with less

relevance have been removed.

Impairment

The Group reviews tangible and intangible assets for impairment

whenever events or changes in circumstances indicate that the

carrying amount of an asset may not be recoverable. In addition,

tangible and intangible assets, as well as intangible assets not

yet available for use, are subject to an annual impairment test.

Recoverability of assets is measured by the comparison of the

carrying amount of the asset to the recoverable amount, which

is the higher of the asset’s value in use and its fair value minus

the cost to sell. In the event that the asset does not generate

cash flows independent from other assets, the impairment

test is not performed at an individual asset level; instead, it is

performed at the level of the cash-generating unit to which the

asset belongs. If the recoverable amount of the cash-generating

unit is estimated to be less than its carrying amount, the carrying

amount of the asset is reduced to its recoverable amount. An

impairment loss is recognized as an expense as soon as it

occurs. The asset’s value in use, either at an independent level

or at a cash-generating unit level, is measured by discounting

the asset’s estimated future cash flows. If there is an indication

that the reasons that caused the impairment loss no longer

exist, the Group will assess the need to reverse all or a portion

of the impairment, as long as it does not exceed the original

carrying amount. In 2015, no impairment of tangible or intangible

assets has been recorded. In the previous year, an impairment of

537k EUR on an intangible asset was made.

Foreign Currency Translation and Business Transactions

The currency of the primary economic environment in which

the artnet Group operates is US dollars, which is the operating

currency for the subsidiary Artnet Corp. Transactions in currencies

other than US dollars are recorded at the rates of exchange

prevailing on the dates of the transactions. At each balance sheet

date, monetary assets and liabilities that are denominated in

foreign currencies are retranslated at the rates prevailing on the

balance sheet date. Gains and losses from foreign currency trans-

actions are recognized as other income/expenses.

On consolidation, the assets and liabilities of the Group’s opera-

tions are also translated at exchange rates prevailing on the

balance sheet date. Income and expense items are translated at

the average exchange rates for the period. The accumulated gains

and losses resulting from translation are recorded as a separate

component of the Group’s equity.

If the conditions of IAS 21.15 are met, intercompany loan receiv-

ables are classified as part of a net investment. Accordingly,

exchange differences on the loan amount in euros will be recog-

nized in the foreign currency adjustment item in equity at closing

dates (including interim reports).

Currency exchange rates significant to the artnet Group, are the

translation of US dollars to euros, and of US dollars to British


36

pounds (GBP). The following exchange rates have been used for

the currency translation in the years presented:

USD to EUR USD to GBP

12/31/2015 12/31/2014 12/31/2015 12/31/2014

Current Rate Year End 0.917 0.823 0.676 0.644

Average Rate for the Year 0.901 0.754 0.654 0.607

New and Amended Standards and

Interpretations for the Fiscal Year

The following new or amended standards and interpretations for which

the application was mandatory in the 2015 fiscal year, did not have any

material impact on the Company’s consolidated financial statements.

New Features and Changes in Accounting Standards

New Standards or Interpretations Issued

Date of EU

Endorsement

IFRIC 21 Levies 6/17/2014 6/13/2014

Changes of Standards

Annual Improvement Project of IASB 2011–2013 1/1/2015 12/18/2014

Not Yet Applied New or Revised

Standards and Interpretations

Future Features and Changes in Accounting

New Standards or Interpretations Issued

Date of EU

Endorsement

IFRS 9 Financial Instruments 1/1/2018 H2 2016

IFRS 14 Regulatory Deferral Accounts 1/1/2016 No Endorsement

IFRS 15 Revenue from Contracts with Customers 1/1/2018 Q2 2016

IFRS 16 Leases 1/1/2019 TBD

Changes of Standards

Changes in IFRS 10, IFRS 12, IAS 28: Amendments

Regarding the Application of the Investment Entities 1/1/2016 Q2 2016

Changes in IAS 12: Amendments regarding the

recognition of deferred tax assets for unrealized losses 1/1/2017 Q4 2016

Changes in IAS 7: Disclosure Initiative 1/1/2017 Q4 2016

Changes in IAS 1: Disclosure Initiative 1/1/2016 12/18/2015

Changes in IFRS 10, IAS 28: Sales or contributions

of assets between an investor and its associate/joint

venture

Rescheduled

Undecided Rescheduled

Changes in IAS 27: To Allow Application of the Equity

Method in Separate Financial Statements 1/1/2016 12/18/2015

Changes in IAS 16, IAS 38: Acceptable Methods of

Depreciation and Amortization 1/1/2016 12/2/2015

Changes in IAS 19:

Employee contributions 2/1/2015 12/17/2014

Changes in IFRS 11: Acquisition of an Interest in a Joint

Operation 1/1/2016 11/24/2015

Changes IAS 16, IAS 41: Accounting Bearer plants 1/1/2016 11/23/2015



Explanations of standards with potential relevance

to artnet’s accounting and reporting

IFRS 15 “Revenue from Contracts with Customers”

The standard IFRS 15 “Revenue from Contracts with Customers”

is effective for fiscal years beginning on or after January 1, 2018.

The new standard reflects the recognition of revenue with the

transfer of confirmed goods or services for customers with the

expected amount of what the Company will get in exchange

for these goods or services. Revenue will be recognized when

the customer receives the authority to dispose of these goods

or services. IFRS 15 regulates also the disclosure of existing

commitments and received compensatory measures. Concep-

tually, revenue recognition is based on a five-step model. First,

the contract has to be identified, which is required for the new

standard IFRS 15. Performance obligations in the contract also

must be identified. In a next step, the transaction price is deter-

mined. Then, the transaction price is allocated to the perfor-

mance obligations in the contract. Finally, revenue is recognized.

The Company currently investigates the effects of the appli-

cation of IFRS 15 on its consolidated financial statements. The

identif ication of contracts with customers and contractual

arrangements is the main concern, as these affect the revenue

recognition. As of now, no significant impact on revenue recog-

nition and deferred revenue for the Group are expected from the

first-time application.

IAS 1 Amendments “Disclosure Initiative"

Amendments to IAS 1 “Presentation of Financial Statements” are

part of the Disclosure Initiative of IASB, which is composed of

several subprojects. These include clarifications on:

• the assessing of the materiality of the details of the financial

statement

• the presentation of additional financial statement items in the

balance sheet and in the statement of profit or loss

• the presentation of other comprehensive income of associates

and joint ventures accounted for using the equity method

• the structure of the notes and the presentation of the relevant

accounting policies


37

artnet has already complied to the emphasis of the materiality

and the relevance of the notes for the consolidated statements

in 2015, and checked the notes against these criteria. This has

led to changes in the presentation of the accounting principles in

the balance sheet items and to a shortening of details with limited

relevance in the notes.

For other prospective new and amended standards, the

accounting and reporting of the artnet Group is expected to be of

no or little relevance.

3. Cash and Cash Equivalents and Explanation

of Consolidated Statement of Cash Flow

Cash and cash equivalents are comprised of cash and bank

balances. Cash and bank balances are stated at fair value. The

Company considers all highly liquid investments with less than three-

month maturity from the date of acquisition to be cash equivalents.

Based on cash transactions, artnet Group’s cash flow statement

represents the change in liquid assets in the reporting period.

According to IAS 7, cash flows are reported separately by the

source and the application of operating activities, investing, and

financing activities.

Cash flow from operating activities is derived indirectly, based on

the Group’s net income. In contrast, cash flow from investing and

financing activities is calculated directly from inflows and outflows.

Acquisition of tangible and intangible assets under finance leases

is eliminated from the cash flow statement, as these investments

are non-cash expenses. Subsequent repayments of finance lease

liabilities are represented as cash flow from financing activities.

The performance of the various cash flows arise by considering

the effects of exchange rate, and shows the change in cash and

cash equivalents of the Group. Cash and cash equivalents as

presented in the cash flow statement include all cash and cash

equivalents recognized in the balance sheet.

4. Accounts Receivable

Accounts receivable are non-derivative financial assets with fixed

or determinable payments that are not listed in an active market.

Accounts receivable are recorded at the invoiced amount and

do not bear interest. They include credit card transactions which

have already been settled, but for which no payment has been

received. The accounts receivable balance demonstrates a net

of allowance for doubtful accounts. The allowance for doubtful

accounts involves significant Management judgment, and review

of individual receivables based on individual customer credit

worthiness, current economic trends, and analysis of historical

bad debts on a portfolio basis. Actual results could differ from

those estimates.

Accounts receivable consist of the following:

12/31/2015

EUR

12/31/2014

EUR

Gross Accounts Receivable 1,517,751 1,022,026

Less: Allowance for Value Adjustment Accounts

Receivable

(245,849) (199,490)

Receivables After Impairment 1,271,902 822,536

All accounts receivable are due within one year.

There is no concentration of credit risk with respect to accounts

receivable, as the Group has a diversified customer base. The

carrying amount of accounts receivable is equal to their fair value.

Receivables by maturity:

12/31/2015

EUR

12/31/2014

EUR

Overdue but not Impaired Receivables

Between 0 and 60 Days 1,037,953 682,591

Carrying Amounts of Impaired Receivables

Overdue Between 61 and 90 Days 105,825 75,953

Overdue More than 90 Days 128,123 63,992

Total Overdue and Impaired Receivables 233,949 139,944

Receivables After Impairment 1,271,902 822,536

The allowance for doubtful accounts is the Group’s best estimate

of the amount of probable credit losses in the Group’s existing

accounts receivable. Accounts receivable that are less than 60

days overdue are not provided for. Accounts receivable that are

more than 60 days overdue are provided for on a grading scale,

based on the age of the individual receivable, with allowances

between 10% and 90% of the nominal value. The Group does not

hold any collateral for accounts receivable balances.


38

Allowance for doubtful accounts developed as follows:

12/31/2015

EUR

12/31/2014

EUR

Balance at the Beginning of the Fiscal Year 199,490 291,962

Bad Debt Expenses for the Year 298,880 262,707

Write-Off of Bad Debts (280,721) (382,857)

Currency Exchange Differences 28,200 27,679

Balance at the End of the Fiscal Year 245,849 199,490

5. Other Current Assets

Other current assets consist mainly of designated restricted

cash balances for def ined contr ibution retirement plans

and health insurance plans in the amount of 164,668 EUR

(2014: 127,846 EUR). For software maintenance and insurance

deposits, prepayments have been made in the amount of

199,607 EUR (2014: 124,192 EUR). In addition, there are claims

on tax payments in Germany and the United Kingdom amounting

to 22,095 EUR (2014: 34,525 EUR).

6. Tangible Assets

Tangible assets are recorded at historical cost minus accumu-

lated depreciation. artnet depreciates its assets over their

estimated useful life using the straight-line method. Computer

equipment, furniture, fixtures, and office equipment are depre-

ciated over an estimated useful life of three to seven years.

Leasehold improvements are amortized over the lesser of the

term of the related lease or its estimated useful life, which is

up to 10 years. Maintenance expenses that neither enhance

the value of an asset nor prolong the useful life are expensed

as incurred.

Tangible Assets in the 2015 and 2014 fiscal years developed

as follows:

Computer and

Hardware

EUR

Operating

and Office

Equipment

EUR

Leasehold

Improvement

EUR

Total

EUR

Acquisition Costs

As of December 31, 2013 571,013 649,760 386,381 1,607,154

Exchange Differences 62,152 78,545 41,435 182,132

Disposals (259,954) (23,987) – (283,941)

Additions 29,232 1,780 – 31,012

As of December 31, 2014 402,442 706,098 427,816 1,536,357


Disposals (153,847) (179,322) – (333,169)

Additions 195,971 – – 195,971

As of December 31, 2015 495,390 603,994 468,446 1,567,830

Depreciation

As of December 31, 2013 454,651 320,802 89,876 865,328


Disposals (260,072) (23,987) – (284,059)

Depreciation for the period 83.698 70.349 35.838 189.885

As of December 31, 2014 341,967 418,662 139,745 900,374


Disposals (153,847) (179,322) – (333,169)

Depreciation for the period 96,654 79,830 67,376 243,860

As of December 31, 2015 330,548 365,573 218,644 914,765

Carrying Amount

As of December 31, 2014 60,475 287,437 288,071 635,982

Includes: Finance Leases 24,308 205,925 – 230,234

As of December 31, 2015 164,842 238,421 249,803 653,065

Includes: Finance Leases 126,810 177,582 – 304,392

The depreciation expense of tangible assets is included in the cost

of sales.

7. Intangible Assets

Intangible assets are comprised of purchased software and

website development costs. Intangible assets are recorded

as historical costs, and amortized on a straight-line basis over

their estimated useful life of three to 10 years. All intangible

assets have a limited useful life. Costs related to the research,

planning, and post-implementation phases of the Group’s

websites—such as minor enhancements and maintenance

or development ef forts—are expensed as incurred. Mainte-

nance expenses which neither enhance the value of an asset

nor prolong the useful life are recorded as expenses. Costs

incurred in the development phase are capitalized if:


39

• the product or process is technically and commercially

feasible

• there is a market for the outcome of the website development

• the attributable expenditure can be reliably measured

• the Group has sufficient resources to complete development

The market condition is substantiated, as only expenditures

related to website development projects and material expansions

are capitalized if such improvements to the website are expected

to generate future revenues.

Intangible assets in the 2015 and 2014 fiscal years developed

as follows:

Development Costs

EUR

Software

EUR

Total

EUR

Acquisition Costs

As of December 31, 2013 1,729,845 344,688 2,074,532

Exchange Differences 168,515 45,725 214,240

Disposals – (15,682) (15,682)

Additions 202,330 1,657 203,987

As of December 31, 2014 2,100,690 376,388 2,477,077


Disposals – (48,389) (48,389)

Additions – 23,518 23,518

As of December 31, 2015 2,341,761 394,710 2,736,470

Amortization

As of December 31, 2013 732,272 166,401 898,673


Disposals – (15,308) (15,308)

Amortization for the period 648,550 106,499 755,049

As of December 31, 2014 1,539,031 289,041 1,828,072


Disposals – (48,389) (48,389)

Amortization for the period 144,750 90,244 234,994

As of December 31, 2015 1,862,968 365,668 2,228,636

Carrying Amount

As of December 31, 2014 561,659 87,346 649,005

Includes: Finance Leases – 72,535 72,535

As of December 31, 2015 478,793 29,042 507,835

Includes: Finance Leases – 17,579 17,579

In the previous years, external development costs for the redesign

of the website in the amount of 661k EUR were capitalized.

The website redesign included an end-to-end restructuring of

the architecture of the website, which changed the structure

and organization of the pages as well as its navigation. Since

the implementation of the first and fundamental phase of the

redesign in April 2014, it is amortized on a straight-line basis over

its estimated useful life of five years.

The amortization expenses for intangible assets are included in

the cost of sales. The extraordinary deprecations for another

intangible asset (development costs of the product Analytics

Reports) in the previous year were reported as a separate item

in the statement of comprehensive income.

As of December 31, 2015, the Group did not have any material

contractual obligations for the acquisition of intangible assets.

8. Taxes and Deferred Taxes

The current tax expense is determined on the basis of the taxable

income of each of the Group’s companies for the fiscal year. The

taxable income is adjusted for items that are non-taxable or tax

deductible. The current tax expense is calculated based on the

applicable tax rates on the balance sheet date.

Income tax expense/(benefit) consists of the following:

2015

k EUR

2014

k EUR

Current Income Taxes

Income Tax Payments in France and Great Britain 1 1

US Corporate Tax (Federal, State) and Income Tax Expenses of

Other Consolidated Companies 31 7

Tax Refunds from Previous Years – –

Total Current Income Taxes 32 8

Deferred Tax

Change in Deferred Tax Assets Based on Loss Carryforwards (83) 608

Temporary Differences – 50

Exchange Rate Differences 83 184

Total Deferred Taxes – 842

Total Income Taxes 32 850

Due to its tax loss carryforwards, Artnet Worldwide Corporation

only has to pay the alternative minimum corporation tax.

Deferred Tax Asset

Deferred taxes are recognized under the asset and liability

method in respect to temporary differences between the financial

statement carrying amounts of assets and liabilities, and their

respective tax bases. Deferred tax liabilities are recognized for all

taxable temporary differences.


40

Deferred tax assets and liabilities are measured using enacted or

substantially enacted statutory tax rates for the time in which the

differences are expected to reverse. Deferred tax assets are recog-

nized to the extent that it is probable that future taxable income will

be available, against which the deductible temporary differences,

unused tax losses, and unused tax credits can be utilized.

Deferred income tax assets and liabilities are offset when there is a

legally enforceable right to offset current tax assets against current

tax liabilities, and when the deferred income tax assets and liabil-

ities relate to income taxes levied by the same taxation authority, on

either the same taxable business or different taxable businesses

where there is an intention to offset the balances on a net basis.

As of the 2015 balance sheet date, Artnet Corp. has a total of

24.5 million EUR (26.7 million USD) in carried-forward tax losses,

available for offset against future profits. As of December 31, 2014,

these carried-forward tax losses amounted to 23 million EUR (28

million USD). In the 2015 fiscal year, the carried-forward tax loss in

the amount of 1.3 million USD was utilized by achieving a taxable

profit. A deferred tax asset of 811k EUR (728k EUR as of December

31, 2013) is recognized in the financial statements for the existing

carried-forward tax losses of Artnet Corp. This increase in euros

as compared to last year is due solely to currency conversion—the

capitalized amount in US dollars remained at 884k USD. The tax

rate used is unchanged at 43%, and represents the average income

tax rate of Artnet Corp. The recognition of deferred tax assets

on carried-forward tax losses is based on a three-year budget.

Carried-forward tax losses can be used over a period of 20 years,

and will begin to expire in 2018 with an amount of 0.7 million EUR

(0.8 million USD). The remaining unused carried-forward tax losses

of Artnet Corp. will expire in subsequent years.

artnet AG has additional carried-forward tax losses available

to of fset corporation and commercial tax in the amount of

34.9 million EUR (12/31/2014: 31.4 million EUR). Due to the

current organizational structure of the artnet Group, these tax

loss carryforwards cannot be used under the German tax law.

In total, deferred taxes recognized relate to the following balance

sheet items:

Deferred Tax Assets

12/31/2015

k EUR

Deferred Tax Assets

12/31/2014

k EUR

Deferred Tax Assets 811 728

Fixed Assets (6) (134)

Accounts Receivable 6 134

Total 728 1,386

Tax Rate Reconciliation

The following table reconciles the expected income tax expense

and/or benefit to the actual income tax expense presented in the

financial statements.

The tax rate of 43% (2014: 43%) is the average income tax rate

of the Artnet Corp., because Artnet Corp. as the main operating

entity generates the taxable income of the Group.

2015

k EUR

2014

k EUR

Earnings Before Tax from Continued Operations 671 (2,197)

Expected Income Tax Expense/(Benefit)—Tax Rate 43% 289 (945)

Non-Deductible Expenses and Other Effects (66) 86

Tax Refunds from Previous Years (469) –

Non-Recognition of Deferred Tax Assets of Loss Carryforwards in

Germany and the United States, and Tax Rate Differences 278 867

Adjustments for Deferred Tax Assets for Tax Loss Carryforwards from

Previous Years – 842

Income Tax Expense/(Benefit) as Presented on the Consolidated

Statement of Comprehensive Income 32 850

9. Accounts Payable

Accounts payable are pr incipal ly comprised of amounts

outstanding for purchases and current costs. The average credit

period taken for accounts payable is 30 days. The carrying

amount of accounts payable approximates their fair value.

10. Accruals and Other Liabilities

Accruals and other liabilities consist of the following for the years

presented:

12/31/2015

EUR

12/31/2014

EUR

Outstanding Invoices 185,816 168,348

Bonus Payments 182,483 160,407

401(k) Payments (Retirement provisions in the USA) 124,563 102,082

Taxes and Social Security 82,266 76,236

Accrued Vacation Pay 11,899 9,612

Taxes 11,531 –

Other 88,594 63,970

Total 687,152 580,655


41

11. Provisions

Provisions are recognized when the Group has a present obligation

from a past event, that is to say, when it is probable that the fulfillment

of this obligation is accompanied by the outflow of resources and

when a reliable estimate of the amount can be made.

Provisions decreased in the fiscal year from 1,085k EUR by 135k EUR

to 950k EUR. Provisions in the previous year for an inherent risk

related to a legal dispute with a former consultant and an employee

(135k EUR) were used for settlements in the amount of 107k USD.

The remaining amount was released to income.

Provisions in the amount of 950k EUR were recorded for possible

indemnity payments due to accusations of copyright infringement

by a French photographer, granted in March 2015 by the Paris

Court of Appeal (800k EUR), and for a case on the same

proceeding in Germany (150k EUR). This provision reflects the

inherent risk to artnet in consideration of all available information,

and covers the alleged claim for damages by the photographer,

and related potential legal and consulting fees.

On May 25, 2015, artnet appealed to the decision at the French

Court of Cassation, and the decision of the court is still pending.

Meanwhile, the judgment of the Germany circuit court is expected

by mid-2016. Regardless of the awaited judgments, artnet has

tried to achieve an amicably settlement with the photographer in

question. As of the closing date, the provision for the litigations

retained unchanged. During the assessment, no new information

about the lawsuits occurred that could justify a reduction of the

provision. Due to completed and planned legal remedies coupled

with the current progress of litigation, artnet does not expect to

pay the total amount of indemnities in 2016.

12. Liabilities from Finance Leases

Assets held under finance leases are initially recognized at

their fair value at the inception of the lease or, if lower, at the

present value of the minimum lease payments. Depreciation

and amortization are recorded over the economic useful life,

or over a shorter contractual period using the depreciation

method that also applies to comparable assets acquired or

manufactured. The finance lease obligation is shown separately

in the consolidated balance statement under liabilities from

finance leases. Minimum lease payments are apportioned in

the finance charge and the reduction of the lease liability, so

as to achieve a constant interest rate applied to the remaining

liability. Contingent lease payments are recorded as expenses

in the periods in which they occur.

Liabilities from finance leases occurred due to purchased

equipment such as servers, computer equipment, software, and

new office and business equipment in previous years. At the end

of the respective contractual period, there is a purchase option

for Artnet Corp. The liabilities from finance leases are carried at

the present value of the future lease payments, using the discount

rate on which the lease agreement is based. The minimum lease

payments were reconciled to the present value as follows:

12/31/2015

Total

EUR

< 1 year

EUR

> 1–3 years

EUR

Present Value of Minimum Lease Payments 195,022 120,459 74,563

Interest Portion 19,448 12,420 7,028

Minimum Lease Payments 214,470 132,879 81,591

12/31/2014

Total

EUR

< 1 year

EUR

> 1–3 years

EUR

Present Value of Minimum Lease Payments 231,492 185,415 46,077

Interest Portion 11,797 10,870 927

Minimum Lease Payments 243,289 196,285 47,004

The carrying amount of liabilities from finance leases corresponds

to their fair value.

13. Deferred Rent Incentive

Non-current liabilities from deferrals for the rent incentive relate to

the advantages from rent-free periods in the amount of 303k EUR

(2014: 309k EUR) for the office premises rented in New York as

of December 31, 2015. Deferrals in US dollars decreased as

scheduled by 46k USD, while the amount in euros remained

almost constant due to currency exchange effects.

14. Deferred Revenue and Revenue Recognition

Revenue for services is recognized when services have been

rendered, that is to say, when the amount of revenue can be

reliably measured and when the receipt of cash for the corre-

sponding claim can be expected. For Gallery Network member-


42

ships and Auction House Partnerships, revenue is recognized

when artnet met its contractual performance obligation and the

respective member site is created, and thus available on the

artnet website. Revenue is recognized at the beginning of each

performance or billing period, and revenue will be deferred on

a monthly basis. Revenues from Price Database subscriptions

are recorded by the same methodology. Revenues are realized

in the period when the customer account was created. Revenue

recognition of advertising contracts is based on the billing terms

mentioned in the contract, with a distinction made between

a fixed price and a performance-based model. Revenue from

advertising contracts with a fixed price are recorded similarly

to the revenue from gallery memberships and subscriptions to

the Price Database: for the period in which the banners are on

the website or in newsletters. Revenue recognition for perfor-

mance-based advertising contracts will be recognized retroac-

tively, after the agreed performance indicators were evaluated

and coordinated with the relevant customer. For online auctions,

buyer and seller commissions are realized the moment when

artnet has arranged the corresponding business successfully.

Revenues are measured at the fair value of the received or to

be received consideration, minus any discounts, VAT, and other

sales taxes.

Customers make advanced payments for cer tain service

contracts with artnet. These prepaid amounts are realized as

revenue only when artnet provides the agreed service. artnet

records these amounts as liabilities from deferred revenue as of

December 31, 2015, amounting to 1,598k EUR as compared to

1,547k EUR in the previous year.

15. Equity

12/31/2015 12/31/2014

Authorized No-Par Value Shares

(accounting par value 1.00 EUR per share) 5,631,067 5,631,067

Issued and Fully-Paid No-Par Value Shares

(accounting par value 1.00 EUR per share) 5,552,986 5,552,986

Treasury No-Par Value Shares 78,081 78,081

artnet AG has only restricted shares. These shares doesn‘t carry

any right to fixed income.

Authorized Capital

The Shareholders’ Meeting of artnet AG on July 16, 2014 autho-

rized the Board of Directors, with the approval of the Supervisory

Board, to increase the capital stock by up to 2,800k EUR before

July 15, 2019, through the issue of 2,800,000 new no-par value

bearer shares in exchange for cash contributions or contributions

in kind (Authorized Capital 2014).

No shares have been issued from the Authorized Capital 2014 at

this point.

Conditional Capital

As per the resolution of the Shareholder’s Meeting on July 15, 2009,

the registered capital was increased by up to 560,000 new

no-par value shares (conditional capital 2009/I) to the Company’s

directors and management team members of affiliated companies

and employees of artnet AG. The authorized conditional capital

2009/I expired during the previous fiscal year. No shares have

been issued from it.

In 2009, 2010, and 2014, 398,907 stock options were granted to

the Management and employees of the subsidiary Artnet Corp.

from the 2009 stock option program. As of now, none of these

options has been exercised. All of these 398,907 issued share

options can increase the conditional capital (conditional capital

2009/I) if they are exercised.

Treasury Shares

As of December 31, 2015, artnet AG held 78,081 of its own

shares, as in the previous year, representing 1.4% of common

stock. The Group’s equity will be reduced by the acquisition

costs of artnet’s treasury stock.

The Shareholders’ Meeting of artnet AG on July 14, 2010 autho-

rized the Board of Directors, with the approval of the Supervisory

Board, to acquire its own shares until the end of July 13, 2015,

up to a 10% stake in the current share capital. At no point

may the acquired shares, together with other shares owned

by the Company or attributable to the Company under Articles

71 et seq. AktG (German Stock Corporation Act), constitute

more than 10% of the share capital. The time limit applied only


43

to acquiring—and not holding—the shares. The decision to

acquire own shares expired on July 13, 2015 without making

use of this option.

On consolidation, the assets and liabil ities of the Group’s

operations are translated at exchange rates prevailing on the

balance sheet date. Income and expense items are translated

at the average exchange rates for the period. The accumulated

gains and losses resulting from translation are recorded as

a separate component of the Group equity. Since the initial

consolidation of the Group, exchange differences arising from

translating assets and liabilities at spot rate—and translating

revenue and expenses at the average rate for the year by

volatile exchange rates—are recorded in the other compre-

hensive income of the Group.

Since 2015, the other comprehensive income also includes

exchange dif ferences ar is ing from the evaluation of the

long-term intracompany loan, which is classified as part of a

net investment. For more information regarding the currency

exchange dif ferences, refer to paragraph 17 of the consol-

idated notes “Financial Instruments and Risks Arising from

Financial Instruments.”

16. Capital Management

The capital structure of the artnet Group consists essentially of

current liabilities from current business transactions, long-term

finance lease obligations, a shareholder’s loan, and equity.

Equity is attributable to the shareholders of the parent company,

and consists primarily of issued shares, capital reserve, and

the accumulated results of the Group. In addition, Artnet Corp.

entered into various finance lease arrangements in the fiscal

year and in the previous years, which will require payments

over the next three to four years. Artnet Corp. also entered into

an operating lease agreement for new office space, which will

require payment over the next seven years. All other business

activities are currently financed by the cash balance and the

operating cash flows.

17. Financial Instruments and Risks Arising

from Financial Instruments

Categories of Financial Instruments

The artnet Group’s financial assets are cash and cash equivalents,

accounts receivable, and rent security deposits. These financial

assets are classified under the category “Loans and Receivables.”

The Group’s financial liabilities are accounts payable, other liabil-

ities, and liabilities arising from finance finance leases and loans.

Accounts payable and other liabilities are measured at amortized

cost. Liabilities arising from finance leases are measured by their

present value of minimum lease payments in accordance with

IAS 17.

Both the carrying amounts of financial assets and the carrying

amounts of financial liabilities are a reasonable approximation of

their fair value. No financial assets or financial liabilities were desig-

nated at fair value.

In the 2015 and 2014 business years, the artnet Group did not use

any derivative financial instruments.

Net Results from Financial Assets and Liabilities

The following chart shows the net results arising from financial

assets and liabilities:

Net Results 2015

EUR

Net Results 2014

EUR

Loans and Receivables (366,439) (473,420)

Financial Liabilities (8,645) 17,651

Total (375,084) (455,769)

The components of the net results are gains or losses from

exchange rate differences, and bad debt expenses for doubtful

accounts and write-offs. Interest expenses in the amount of

28k EUR (2014: 35k EUR) are included in the net result of

financial liabilities.

Credit Risk

Credit risk refers to the risk that is inherent if a counterparty

defaults on its contractual obligations, resulting in a financial loss.

These financial assets represent the artnet Group’s maximum

exposure to credit risk.


44

The artnet Group’s credit risk is primarily attributable to its

accounts receivable. The amount presented in the balance

sheet is a net of allowances for doubtful accounts, estimated by

Management, based on the aging of the receivable portfolio and

customer payment trends.

artnet has no significant concentration of default risk because

the exposure is distributed over a large number of customers,

including individuals and entities dealing within the fine art market.

Nevertheless, the global economic downturn could negatively

influence the solvency of the Group’s customers, leading to an

increase in the average credit period, or, at worst, leading to an

increase in customer default. This would negatively affect the

Group’s earnings, as well as its financial position. artnet tries

to counteract such risks by requiring upfront payments from

customers whenever possible.

Liquidity and Interest Risk

Liquidity risk arises in the event that the artnet Group could not

meet financial obligations on their due date. Therefore, the aim

is to provide sufficient liquidity to meet liabilities on time. To this

end, the artnet Group is reliant on generating a positive cash flow

from operating activities. Liquidity risk is constantly revalued on a

daily basis, using a deviation analysis of current and monthly cash

equivalents as reported in the liquidity planning, which ensures

a quick response to changes in the risk potential. Management

expects a positive operating cash flow for the 2016 fiscal year,

based mainly on planned sales increases and the assumption

that a potential payment obligation related to the copyright

infringement litigation will not occur. If revenue does not increase

as expected, planned investments may be rescheduled, or their

implementation may be extended.

The artnet Group faces no material interest-rate risk. The Group’s

companies have several interest-bearing finance lease agree-

ments in the amount of 195k EUR (2014: 231k EUR), and an

interest-bearing shareholder loan in the amount of 294k EUR

(2014: 500k EUR). Other current liabilities and accrued expenses

have a remaining term of less than one year.

The gross cash flows arising from financial liabilities, including

anticipated interest payments, are shown in the following chart:

12/31/2015

Carrying

Amount

EUR

Gross

Cash Flow

EUR

Gross

Cash Flow

EUR

Gross

Cash Flow

EUR

Total < 1 Year > 1 Year

Liabilities at

Amortized Costs 754,710 761,235 761,235 –

Liabilities from

Finance Leases 195,022 214,470 132,879 81,591

12/31/2014

Carrying

Amount

EUR

Gross

Cash Flow

EUR

Gross

Cash Flow

EUR

Gross

Cash Flow

EUR

Total < 1 Year > 1 Year

Liabilities at

Amortized Costs 1,264,579 1,282,579 1,078,579 204,000

Liabilities from

Finance Leases 231,492 243,289 196,285 47,004

As of December 31, 2015, liabilities at amortized cost included the

shareholder loan, along with accrued interest in the carrying value

of 294k EUR (2014: 500k EUR).

Provisions are not financial instruments, and are therefore not

mentioned in the above calculation of liquidity risk under IFRS 7. It

is assumed that the current provisions will lead to a cash outflow

in the 2016 fiscal year. Exceptions to this include the current provi-

sions for legal disputes in France and Germany in the amount of

950,000 EUR for the alleged copyright infringement of a photog-

rapher. Contrary to the short-term disclosure, artnet does not

expect a cash outflow of the total amount accrued in the 2016

fiscal year due to planned legal remedies.

Market Risk—Foreign Currency Risk

Market risks are mainly relevant in the form of foreign currency

exchange risks for the Group’s companies, as most of the revenues

are generated in US dollars but a certain amount of costs must

be paid in euros. The artnet Group controls these currency

exchange risks by invoicing its European customers in euros, and

using these cash payments to fulfill its obligations in the foreign

currency. This helps to reduce the exchange rate risk. Besides

the US-dollar-to-euro exchange rate risk, the artnet Group is also

exposed to the US-dollar-to-British-pound exchange rate risk, but

on a smaller scale. In addition, foreign currency risks exist for the

artnet Group from intercompany euro claims coming from financing


45

the parent company artnet AG, which is located in the Europe, and

the operating subsidiary Artnet Corp., which is located in the United

States, and for euro bank stocks for Artnet Corp.

The carrying amounts of the Group’s monetary assets and

monetary liabilities, denominated in currencies other than the US

dollar at the reporting date, are as follows:

Foreign Currency Financial Assets Financial Liabilities

12/31/2015

k EUR

12/31/2014

k EUR

12/31/2015

k EUR

12/31/2014

k EUR

EUR 537 648 18 21

GBP 268 158 2 6

Additionally, the intragroup receivables validating in euros from

Artnet Corp. against artnet AG amounted to 2,104k EUR as of

December 31, 2015 (2014: 2,178k EUR). This bears a theoretical

currency risk for Artnet Corp., which will not be recognized in profit

or loss in the consolidated financial statements. To minimize this

risk, Artnet Corp. converted existing current intercompany receiv-

ables of artnet AG in the amount of 2.1 million EUR into a long-term

intercompany loan. In December 2015, this long-term intercompany

loan was reduced to 1.5 million EUR. A settlement for this this loan

is neither planned nor likely to occur in the foreseeable future.

The intercompany loan qualifies as a net investment according to

IAS 21.15. Accordingly, exchange differences on the euro-validating

loan will be recognized in other comprehensive income, and will

thus be accumulated in a separate component of equity until full or

partial disposal of artnet AG ownership interest in Artnet Corp. In

2015, currency exchange effects in the amount of 226k EUR were

recognized as net investment in other comprehensive income, and

reduced the equity.

The following table details the Group’s sensitivity to a 10%

increase and decrease of the US dollar against the euro and the

British pound. The sensitivity analysis includes only outstanding

foreign currency denominated monetary items, and adjusts their

translation at the balance sheet date in accordance with a 10%

change in foreign currency rates. Included in the chart is also

the exchange rate risk, as mentioned above from the intragroup

receivables. A positive number below indicates an increase in

profit and other equity.

Against USD

EUR

12/31/2015

k EUR

EUR

12/31/2014

k EUR

GBP

12/31/2015

k EUR

GBP

12/31/2014

k EUR

+10%

Result (89) (243) (16) (8)

Equity 69 -246 -2 -3

-10%

Result 109 298 20 10

Equity (84) 225 2 3

As compared to December 31, 2014 (0.823 USD/EUR), the US

dollar has increased against the euro as of December 31, 2015

(0.917 USD/EUR) by 11.4%.

Interest Rate Risk

The finance leases of the Group bear a fixed interest rate. As of

December 31, 2015, liabilities with a floating rate are solely comprised

of the interest rate limit of the shareholder loan. Therefore, the artnet

Group is currently exposed only to an insignificant interest rate risk.

18. Share-Based Remuneration

Stock Option Plan

artnet AG provided equity-settled share-based payments to

executive management and to certain employees of Artnet Corp.

The equity-settled share-based payments are measured at fair value

at the date of the grant. The fair value determined at the grant date,

minus the fair value of any consideration received at the grant date,

is expensed over the vesting period based on the estimated amount

of shares that will eventually vest. The fair value of the equity-settled

share-based payments is measured using the binomial model.

Conditional Capital 2009/I served as the basis for the stock option

plan—also resolved by the Shareholders’ Meeting on July 15, 2009

on the subject of the 2009 stock option plan—and comprised

of 560,000 shares of common stock with a nominal value of

1.00 EUR each. The Conditional Capital expired on July 14, 2014.

In 2009, 2010, and 2014, stock options were granted to the

Management and employees of the subsidiary Artnet Corp. from

the 2009 stock option programs.


46

Options

2014 2010 2009

Number of Options Granted 75,000 130,000 193,907

Share Price at the Time of Granting (EUR) 2.70 5.03 5.02

Weighted Average Exercise Price (EUR) 2.64 5.13 4.66

Weighted Average Performance Target (EUR) 2.90 5.64 5.13

Average Maturity (Years) 10 10 10

Risk-Free Rate (%) 0.59 1.27 3.40

Expected Average Volatility (%) 65 70 55

Expected Dividend Return – – –

Fair Value of Options at the Time of Granting (EUR) 1.90 3.18 3.89

Fair Value of Options at the Time of Granting Total (EUR) 142,500 413,400 754,298

As of December 31, 2015 the number of outstanding options

remained at 398,907. As in the previous year, the outstanding

options for the years 2009 and 2010 could not be exercised, as

the market price of the artnet shares were significantly below the

respective exercise price. The options granted in 2014 may not be

exercised for a two-year period (March 31, 2016). The outstanding

options on December 31, 2015, had a weighted average remaining

term of 4.91 years (December 31, 2014: 5.91 years).

The fair value of the stock options was calculated in 2009, 2010,

and 2014 from the date on which the options were granted

based on the binomial model, on the basis of the assumptions

of the chart above.

The options can be exercised for the first time at the end of two

years, beginning at midnight on the option allotment date, and

then up until the end of their term; they expire 10 years after

the grant date. Rights may not be exercised in the period from

two weeks before the end of the quarter until the end of the first

trading day after publication of the quarterly results, and also

may not be exercised in the period from two weeks before the

end of the fiscal year until the end of the first trading day after

publication of the results for the past fiscal year.

The plan also sets out that rights may only be exercised if the

closing market price determined before the date of the planned

exercise of the option exceeds the exercise price by at least 10%.

If this performance target has been reached on one occasion, the

options can be exercised during the exercise periods, independent

of further price development of the artnet shares over their term.

Stock Appreciation Rights (SAR)

In 2015, Artnet Corp. launched a “Stock Appreciation Rights

Program” for certain executives. As part of this program, partici-

pating employees receive a certain number of rights to benefit from

artnet AG’s share price increase. The participation rights grant solely

a right to cash settlement, not to artnet AG’s shares. The assessment

of the Stock Appreciation Rights follows the intrinsic value. To

evaluate the Stock Appreciation Rights, a binomial model was used.

This model takes various conventional vesting conditions for stock-

based compensation models into account. The expected volatility

is calculated based on the monthly, weekly, and daily changes in

the stock market price for the period of 2013 to 2015. The arising

changes in value due to share price changes are recognized during

the vesting period as personnel costs, or, in case of impairment, in

other operating income. Cash payment obligations are recognized

as other long-term or current liabilities, depending on the remaining

time of the vesting period.

In 2015, 35,000 Stock Appreciation Rights were issued to

employees. These are exercisable when the artnet AG’s share

price exceeds at least 10% on the issue date, but at the earliest

after the end of the vesting period of two years. The share price

was 2.09 EUR on the issue date, and the target price of 2.30 EUR

was exceeded within 2015. As of December 31, 2015, the time

until the end of the vesting period was 1.25 years. Outstanding

rights expire in 9.25 years.

For issued Stock Appreciation Rights, a liability in the amount of

16.354 EUR was recognized separately in non-current liabilities,

the same amount that is recorded as expenses for these rights

in 2015. Expenses in the amount of 86.695 EUR were booked for

share-based remunerations in the 2015 fiscal year, compared to

55,090 EUR in 2014.

19. Personnel Expenses

The consolidated statement of comprehensive income includes

personnel expenses of discontinued divisions for the fiscal years

stated in the following expense categories:


47

Personnel Expenses by Expense Category

2015

k EUR

2014

k EUR

Cost of Sales 3,697 3,454

Sales and Marketing 2,959 2,197

General and Administrative Expenses 1,722 1,496

Product Development 2,664 1,934

Total Personnel Expenses 11,042 9,081

While personnel expenses decreased in the operating currency

of US dollars by 2% to 12,255k USD, it increased in the reporting

currency of euros by 22% due to exchange rate effects.

The total personnel costs in the 2015 and 2014 fiscal years include

social security expenses of 1,423k EUR and 1 million EUR, and

401(k) expenses of 121k EUR and 104k EUR.

On average, the Group employed 113 full-time employees in 2015,

as compared to 116 in the previous year. Additionally, the Group

employed two part-time employees in 2015, as compared to four

in the previous year. In sales and other departments, the Group

had 11 freelancers, which was the same as in the previous year.

The average number of employees in the 2015 and 2014 fiscal

years was 127 and 131, respectively. The employees were

engaged in the following activities:

2015 2014

Cost of Sales 59 68

Sales and Marketing 36 33

General and Administrative Expenses 13 12

Product Development 19 18

Total 127 131

20. Defined Contribution Plans

The subsidiary Artnet Corp. offers a retirement plan to all quali-

fying employees, which qualifies under Section 401(k) of the

Internal Revenue Code of the United States. The assets of this

plan are held separately from those of Artnet Corp., and are

managed by a trustee. Participating employees may contribute up

to 100% of their annual salary, but not more than statutory limits.

Artnet Corp. has a discretionary matching contribution each year.

In 2015, the matching contributions were 121k EUR, as compared

to 104k EUR in the previous year.

21. Earnings Per Share

Basic earnings per share are calculated by dividing net income

by the weighted average number of outstanding common shares

during the year.

Diluted earnings per share are calculated in the same manner

as basic earnings per share, with the exception that the average

number of outstanding shares increased with the addition of the

potential number of shares from stock option conversions.

The calculation of earnings per share is based on the following:

2015

EUR

2014

EUR

Numerator (Earnings):

Net income for the fiscal year 638,949 (3,047,392)

Denominator (Number of Shares):

Weighted average number of ordinary shares

used to calculate basic earnings per share

(issued and fully paid ordinary shares) 5,552,986 5,552,986

Effect of potential dilutive shares

from stock options – –

Weighted average number of ordinary shares

used to calculate dilutive earnings per share 5,552,986 5,552,986

The weighted average share price of stock options (4.43 EUR)

is higher than the weighted average exercise price in 2015

(2.09 EUR). As a result, there are no diluted shares.

22. Other Disclosures on the Consolidated

Statement of Comprehensive Income

Net Operating Income

The net operating income stated results after the deduction of the

following operating expenses:

2015

k EUR

2014

k EUR

Scheduled Amortization/Depreciation 479 407

Personnel Expenses 11,042 9,081

Scheduled depreciation and amortization are presented in the

consolidated statement of comprehensive income as part of the cost

of sales. The breakdown of the amortization of intangible assets and

tangible assets is listed in sections 6 and 7 of the consolidated notes.

Financial Results

The financial result in 2015 primarily includes interest expenses

for liabilities from finance leases in the amount of 13k EUR


48

(2014: 31k EUR). For the long-term shareholder loan granted in 2013,

which was converted into a short-term loan, interests amounted to

16k EUR, (2014: 20k EUR).

Other Income and Expenses

In the previous year, other expenses amounted to 1,020k EUR

and included mainly provisions for legal disputes in the amount

of 950k EUR, and realized and unrealized losses on currency

exchange rates in the amount of 286k EUR. In 2015, the realized

and unrealized losses on currency exchange rates amounted to

67k EUR. In 2015, 8k EUR was incurred for non-operating income

and expenses.

23. Segment Reporting

The Group reports on the operating segments in the same way it

reports this information internally to the Management and Super-

visory boards.

At the beginning of the 2015 fiscal year, the Group adjusted

its segment reporting. Management no longer considers the

previous segmentation appropriate to provide sufficient infor-

mation. As part of the modification of internal reporting, the

decision was made to disclose the online news platform, artnet

News, as its own segment. In the previous year, the English-lan-

guage news platform was considered a PR and marketing tool

that supported business operations as a whole. The number

of reportable segments has not increased, as Management

no longer considers it appropriate to disclose advertising as a

standalone segment. Advertising revenue will now be allocated

to the segments where banners have been placed. If an adver-

tising banner, for example, is placed on the product page of the

Price Database, advertising revenues will be allocated to that

segment. In addition, since the beginning of the fiscal year the

segment reporting was changed to a multilevel Contribution

Margin accounting. In the first stage, the dif ference of the

generated revenues and the direct variable costs (Contribution

Margin (CM I)) for each segment is calculated. In a second step,

variable indirect costs, which are not directly attributable to a

segment, are subtracted from the CM I by allocating them to

the segments with an allocation key. The so-determined Contri-

bution Margin (CM II) is the amount available by segment to

cover the fixed costs. Management expects a better picture of

the profitability of each segment due to this change.

Following the requirements of IFRS 8 “Operating Segments”

(Management Approach), this realignment has retroactively led to

a change in the segment report in 2014.

The Group’s reporting is based on the following four segments:

• The Gallery Network segment, which presents artworks from

member galleries and partner auction houses online

• The Price Database segment, comprising all database-re-

lated products, including the Price Database Fine Art and

Design and the Price Database Decorative Art, as well as

the products based thereupon, Market Alerts and Analytics

Reports

• The artnet Auctions segment, which provides a platform to

buy and sell artworks online

• The artnet News segment, offering an online news service

providing information about the events, trends, and people

shaping the art market and global art industry

Management decisions for segments are based on the Contri-

bution Margin II (revenue minus direct and indirect variable

costs), which is therefore presented below as the segment result.

Indirectly attributable expenses are allocated to the segments

using the ratio of headcounts and revenue for each segment. The

segment reporting is presented, similarly to the internal commu-

nication, in US dollars.

An allocation of assets or liabilities for each segment is not

provided to Management. Therefore, segment-related assets and

liabilities are not presented in this report.

2015

Revenue

k USD

Contribution Margin II

k USD

artnet Galleries 6,895 4,230

artnet Price Database 7,678 4,308

artnet Auctions 2,906 (738)

artnet News 1,704 (807)

Total 19,183 6,994


49

2014 (adjusted)

Revenue

k USD

Contribution Margin II

k USD

artnet Galleries 6,518 3,216

artnet Price Database 8,308 4,391

artnet Auctions 3,151 (357)

artnet News 479 (1,295)

Total 18,456 5,955

The reconciliation of the Contribution Margin II to the operating

income of the Group is presented in the following table:

Reconciliation of Segments Contribution

Margin II to the Operating Income

2015

k USD

2014

k USD

Contribution Margin II 6,994 5,955

Fix Costs included in Sales Expenses Including Depreciation

-531,000 USD (Previous Year: 630,000 USD) 2,237 2,321

Fix Costs included in General and Administrative Expenses 3,475 3,863

Fix Costs included in Product Development Expenses 496 552

Operating Income 785 (781)

Advertising revenue will now be allocated to the segments where

banners have been placed. The following table reconciles the

advertising revenue in the consolidated statement and the presen-

tation in the segment reporting:

2015

Revenue in

Consolidated

Income Statement

k USD

Allocated

Advertising

Revenue

k USD

Revenue by

Segment

k USD

Segments

artnet Galleries 5,428 1,467 6,895

artnet Price Database 7,231 447 7,678

artnet Auctions 2,906 – 2,906

artnet News – 1,704 1,704

Allocated advertising revenue 3,618 -3,618 –

Total 19,183 – 19,183

2014 (adjusted)

Revenue in

Consolidated

Income Statement

k USD

Allocated

Advertising

Revenue

k USD

Revenue by

Segment

k USD

Segments

artnet Galleries 5,942 576 6,518

artnet Price Database 7,469 839 8,308

artnet Auctions 3,151 – 3,151

artnet News – 479 479

Allocated advertising revenue 1,894 -1,884 –

Total 18,456 – 18,456

The subsequent adjustments for receivables as non-cash expenses

are affecting the result of each segment. The allocation of scheduled

depreciation and amortization to each segment is reported to the

Management and the Supervisory Board on a regular basis:

2015

k USD

Scheduled Depreciation/

Amortization

Allowance for

Bad Debts

artnet Galleries 155 106

artnet Price Database 173 121

artnet Auctions 111 52

artnet News 92 22

Total 531 301

2014

k USD

Scheduled Depreciation/

Amortization

Allowance for

Bad Debts

artnet Galleries 184 63

artnet Price Database 205 72

artnet Auctions 132 31

artnet News 109 13

Total 630 179

24. Information by Geographic Region

The Group’s operations are primarily located in the United States,

represented by the subsidiary, Artnet Corp.

The following table provides an analysis of the Group’s revenue by

geographic market:

Revenue

2015

k EUR

2014

k EUR

USA 10,166 7,554

Europe 5,562 5,124

Other 1,556 1,229

Total 17,284 13,907

Assets by Geographic Region

The following table presents an analysis of the carrying amount

of the Group’s assets, and additions to property and equipment

and intangible assets, analyzed by the geographic region in

which the assets are located.

Carrying Amounts of Assets Additions to Fixed Assets

12/31/2015

k EUR

12/31/2014

k EUR

12/31/2015

k EUR

12/31/2014

k EUR

United States 4,865 4,444 218 161

Germany 84 119 1 –

Great Britain 32 35 – –

France 3 29 – –

Total 4,985 4,627 219 161

The segment results and liabilities of the Group are not allocated

by geographic region, as this is not possible in a meaningful way.


50

The Group’s scheduled depreciation and amortization amounting

to 479k EUR is mainly allocated to the assets in the United States

of (2014: 930k EUR, including non-scheduled depreciation).

25. Operating Leases

Operating lease payments are recognized as an expense in the

statement of comprehensive income on a straight-line basis over

the term of the lease. Benefits received and receivable, as an

incentive to enter into an operating lease, are spread over the lease

term on a straight-line basis.

Artnet Corp. has rented its offices in New York as part of

irredeemable leases (operating leases) with a term through

April 30, 2023.

For the new office in Berlin, the Group has agreed on a lease for

two years. The lease includes an option to extend the lease for

another year. The lease for artnet UK Ltd.’s office in London can

be terminated at any time.

As of both December 31, 2015 and 2014, the following future

minimum lease payments resulting from the existing office lease

agreements:

Lease Payments

12/31/2015

k EUR

12/31/2014

k EUR

Expiring in less than One Year 866 809

Expiring Between Two and Five Years 3,677 3,164

Expiring in more than Five Years 2,299 2,912

Total 6,843 6,885

Office lease expenses for the Group in the fiscal year amounted

to 884k EUR, and to 737k EUR in the previous year.

26. Auditor’s Fees

Auditor’s fees, including travel expenses, for the audit of the

statutory financial statements of the Company and the consol-

idated financial statements amounted to 61k EUR in 2015, and

63k EUR in the previous year. In addition, the Company recorded

20k EUR in 2015, and 19k EUR in 2014, for other services. All

fees are recognized as expenses in 2015 and 2014, respectively.

27. Related-Party Transactions

Transactions between the Company and its subsidiaries, which

are related parties, have been eliminated on consolidation and

are not disclosed in this note.

Management Board

Jacob Pabst is the CEO of artnet AG and Artnet Corp.

In the 2015 and 2014 fiscal years, Jacob Pabst received the

following remuneration from the Group:

2015

EUR

2014

EUR

Fixed Salary 304,088 235,469

Value of Additional Payments (Health Insurance) 10,025 8,859

Fixed Remuneration Components 314,112 244,327

Bonus (Variable Compensation) 25,000 –

Total 339,112 244,327

Supervisory Board

• John D. Hushon, Naples, Florida, USA, Chairman

• Hans Neuendorf, Berlin, Germany, Deputy Chairman

• Piroschka Dossi, Munich, Germany

Mr. Neuendorf, and companies under his control, own 1,523,551

shares of artnet AG.

Mr. Hushon holds 53,054 shares of artnet AG.

Remunerations in the following amounts were paid to the members

of the Supervisory Board in the 2015 and 2014 fiscal years:

2015

EUR

2014

EUR

John D. Hushon 50,000 50,000

Hans Neuendorf 37,500 37,500

Piroschka Dossi 25,000 25,000

Total 112,500 112,500

The remuneration report outlines the principles used for deter-

mining the compensation of the Supervisory Board of artnet AG In

addition, the report describes the policies and levels of compen-

sation paid to Supervisory Board members.

Other Transactions with Related Parties

During the fiscal year, Hans Neuendorf sold one item on the online


51

auction platform, artnet Auctions. In accordance with the current

terms and conditions, no commission was charged for this sale, as

the value of this artwork exceeded 10,000 USD.

On March 28, 2013, the main shareholder of the Company, Hans

Neuendorf, granted a loan at better-than-market conditions in

the amount of 500k EUR, repayable by May 1, 2015. The loan is

subject to a floating interest rate (30-day LIBOR plus 200 basis

points), with a minimum interest rate of 4% per year, and is not

collateralized. On November 6, 2014, the two parties agreed on

repaying the loan in 20 equal monthly installments of 25k EUR,

starting on January 31, 2015 until August 31, 2016, under the

conditions that the cash and bank position is 1.5 million USD for

the respective month. On May 20, 2015, the shareholder loan was

terminated with mutual consent and replaced by a short-term

loan in the amount of 510,002 EUR. Later in 2015, the loan was

redeemed in the amount of 225k EUR. Interest in the amount of

16k EUR (2014: 20k EUR) was expensed in 2015.

The related parties of Mr. Neuendorf (Deputy Chairman) and

Mr. Pabst (CEO) worked or provided services in the amount of

100,326 EUR in 2015 and 62,295 EUR in 2014, respectively, at

market conditions.

28. Accounting Estimates and Judgments

The preparation of the Group’s consolidated financial statements

requires Management estimates and assumptions that affect

reported amounts and related disclosures. All estimates and

assumptions are made to the best of Management’s knowledge

in order to fairly present the Group’s financial position and results

of operations. Actual results and developments may deviate from

current assumptions

The following accounting policies are significantly impacted by

Management’s estimates and judgments:

Deferred Tax Assets

At each balance sheet date, the Group assesses whether the reali-

zation of future tax benefits is sufficiently probable to recognize

deferred tax assets. This assessment requires the exercise of

judgment on the part of Management with respect to, among

other things, benefits that could be realized from available tax

strategies and future taxable income, as well as other positive

and negative factors. The amount of deferred tax assets could be

reduced if projected future taxable profits are lowered.

Capitalized Costs of Website Development

Capitalized website development costs relate to new products,

material additions, or improvements to the website that the

Company anticipates will produce revenue in the future. The

revenue projections for these new products are based on

Management’s best estimates, but actual results could vary from

projections.

Provisions

Based on reasonable estimates, provisions for possible legal

issues will be recorded. Opinions from external experts such as

lawyers or tax consultants will be considered for such evaluations.

Any differences between the original estimate and the actual

outcome in the respective period can have an impact on the net

assets, financial position, and results of operations of the Group.

For current provisions, a cash outflow is anticipated for the 2016

fiscal year, with an exception for the provision in the amount of

950k EUR for litigations in France and Germany in connection to

a copyright infringement claim by a photographer. Contrary to the

short-term disclosure, due to legal actions undertaken by artnet,

the Group does not expect a cash outflow for this provision in

2016. There are significant uncertainties related to the timing and

the actual amount for the cash outflow.

29. Significant Events After the Balance Sheet Date

In March 2016, the French Court of Cassation rendered its

decision in a lawsuit of a French photographer versus artnet AG,

artnet France Sarl, and Artnet Worldwide Corp. concerning his

claim of a violation of copyright. Based on procedural aspects of

the case, the French Court of Cassation has ruled in favor of the

French photographer.

In the previous level of jurisdiction, the Paris Court of Appeal had

ordered artnet AG, artnet France Sarl, and Artnet Worldwide


52

Corp. to pay 764,412 EUR to Mr. Briolant, and held that artnet AG,

artnet France Sarl, and Artnet Worldwide Corp. are jointly and

severally liable. The appeal filed against this judgment by artnet

AG, artnet France Sarl, and Artnet Worldwide Corp. intended

to obtain a cancellation of this ruling by the Court of Cassation,

and sought to have the entire case reviewed by a different Court

of Appeal. However, the French photographer filed a motion

claiming that this appeal cannot be processed by the Court of

Cassation for failure to meet certain prerequisites with respect

to the enforcement of the ruling from the Court of Appeal. This

motion was argued by the parties before the court in a hearing

which led to a pre-trial ruling in favor of the motion of the French

photographer.

Consequently, the pre-trial ruling is not based on any consider-

ation of the arguments that artnet AG, artnet France Sarl, and

Artnet Worldwide Corp. formed to challenge the grounds of the

ruling from the Court of Appeal. The Court of Cassation could

reregister the case if all or part of the above mentioned compen-

sations are paid within a two-year period.

The Company will carefully evaluate its legal options and all other

available means concerning this matter.

No other reportable events of significance for the net assets,

financial position, and results of the artnet Group have occurred

after the balance sheet date.

30. Notifications According to the Wertpapierhandelsgesetz

(WpHG - German Securities Trading Act)

According to § 21 WpHG shareholders are required to report

when the level of their shareholdings exceed or fall below certain

thresholds. The thresholds are 3%, 5%, 10%, 15%, 20%, 25%,

30%, 50%, and 75%.

artnet AG was notified about the following notification of voting

rights as per § 26 WpHG:

October 7, 2015

Mr. Brewster Fine, United States, informed us on October 6, 2015

that his share of the voting rights in artnet AG exceeded the

threshold of 3% on October 1, 2015 and on this date amounts to

3.24% (182,198 voting rights of the total of 5,631,067 voting rights

in artnet AG).

April 7, 2015

1. Weng Fine Art AG with its registered office in Krefeld, Germany,

informed us on April 2, 2015 that its share of the voting rights in

artnet AG fell below the threshold of 3% on March 27, 2015 and

on this date amounts to 2.66% (150,000 voting rights of the total

of 5,631,067 voting rights in artnet AG).

2. Mr. Rüdiger K. Weng, Germany, informed us on April 2, 2015

that his share of the voting rights in artnet AG fell below the

threshold of 3% on March 27, 2015 and on this date amounts

to 2.67%, (150,100 voting rights of the total of 5,631,067 voting

rights in artnet AG). The entire voting rights are attributable to Mr.

Rüdiger K. Weng pursuant to sec. 22 para. 1 sent. 1 no. 1 WpHG.

March 23, 2015

1. Weng Fine Art AG with its registered office in Krefeld, Germany,

informed us on March 20, 2015 that its share of the voting rights

in artnet AG fell below the threshold of 5% on March 16, 2015 and

on this date amounts to 4.56% (257,000 voting rights of the total

of 5,631,067 voting rights in artnet AG).

2. Mr. Rüdiger K. Weng, Germany, informed us on March 20,

2015 that his share of the voting rights in artnet AG fell below the

threshold of 5% on March 16, 2015 and on this date amounts

to 4.58%, (258,150 voting rights of the total of 5,631,067 voting

rights in artnet AG). The entire voting rights are attributable to

Mr. Rüdiger K. Weng pursuant to sec. 22 para. 1 sent. 1 no. 1

WpHG, including the voting rights of the following shareholder

whose holdings of voting rights amount to 3% or more: Weng

Fine Art AG.

March 12, 2015

Mr. Hans-Herbert Döbert, Germany, informed us on March 11,

2015 that his share of the voting rights in artnet AG exceeded the

threshold of 3% on March 10, 2015 and on this date amounts to

3.01%, (169,700 voting rights of the total of 5,631,067 voting rights

in artnet AG).


53

Jacob Pabst

CEO, artnet AG


The Company has published this information on its investor

relations page online.


54

English Translation of the Independent Auditors’ Report

We have audited the consolidated financial statements prepared

by artnet AG, Berlin, comprising the consolidated statement of

financial position, the consolidated statement of comprehensive

income, the consolidated statement of changes in equity, the

consolidated statement of cash flows and the notes to the consol-

idated financial statements, together with the Group management

report for the business year from January 1 to December 31, 2015.

The preparation of the consolidated financial statements and

group management report in accordance with IFRS as adopted

by the EU, and the additional requirements of German commercial

law pursuant to § 315a (1) German Commercial Code (HGB) are

the responsibility of the legal representatives of the Company.

Our responsibility is to express an opinion on the consolidated

financial statements and on the Group management report based

on our audit.

We conducted our audit of the consolidated financial statements

in accordance with § 317 HGB [Handelsgesetzbuch; “German

Commercial Code”] and German generally accepted standards

for the audit of financial statements promulgated by the Institute of

Public Auditors in Germany (Institut der Wirtschaftsprüfer – IDW).

Those standards require that we plan and perform the audit such

that misstatements materially affecting the presentation of the net

assets, financial position and results of operations in the consol-

idated financial statements in accordance with the applicable

financial reporting framework and in the Group management

report are detected with reasonable assurance. Knowledge of the

business activities and the economic and legal environment of the

Group and expectations as to possible misstatements are taken

into account in the determination of audit procedures. The effec-

tiveness of the accounting-related internal control system and the

evidence supporting the disclosures in the consolidated financial

statements and the Group management report are examined

primarily on a test basis within the framework of the audit. The

audit includes assessing the annual financial statements of those

entities included in the consolidation, the determination of entities

to be included in consolidation, the accounting and consolidation

principles used and significant estimates made by management,

as well as evaluating the overall presentation of the consolidated

financial statements and the Group management report. We

believe that our audit provides a reasonable basis for our opinion.

Our audit has not led to any reservations.

In our opinion, based on the findings of our audit, the consolidated

financial statements comply with IFRSs as adopted by the EU and

the additional requirements of German Commercial Law pursuant

to § 315a (1) HGB and give a true and fair view of the net assets,

financial position and results of operations of the Group, in accor-

dance with these requirements. The Group management report is

consistent with the consolidated financial statements, as a whole

provides a suitable view of the Group’s position and suitably

presents the opportunities and risks of future development.

Without qualifying our opinion we refer to the deliberations of

the management board concerning the liquidity risk in the risk

reporting section of the group management report. There it is

stated that it could still lead to liquidity risks which could endanger

the group as a going concern if the judgment in March 2015 to

damages of EUR 0.8 million by an appeal court in France would

have to be paid on a short term basis. The appeal filed against

this judgment in May 2015 was dismissed by the French Court

of Cassation in March 2016 by means of a pre-trial ruling. The

management board wants to exercise all legal options available

against the enforcement of the judgment as well as conduct

negotiations with the plaintif f for a settlement out of court.

Therefore the management board does not expect a complete

cash outflow because of the judgment in 2016.

Ebner Stolz GmbH & Co. KG

Wirtschaftsprüfungsgesellschaft Steuerberatungsgesellschaft

Florian Riedl

Wirtschaftsprüfer

Dirk Schützenmeister

Wirtschaftsprüfer

Hamburg, April 8, 2016


55

artnet AGSupervisory BoardJohn Hushon, ChairmanHans Neuendorf, Deputy ChairmanPiroschka DossiManagement BoardJacob Pabst, CEO

Artnet Worldwide CorporationJacob Pabst, CEO

artnet France sarlJacob Pabst, CEO

artnet UK Ltd.Jacob Pabst, CEO

Addresses

artnet AGOranienstraße 16410969 [email protected]: +49 (0)30 209 178-0 F: +49 (0)30 209 178-29

Artnet Worldwide Corporation233 Broadway, 26th FloorNew York, NY [email protected]: +1-212-497-9700F: +1-212-497-9707

artnet UK Ltd.Morrell House98 Curtain RoadLondon EC2A 3AFUnited [email protected]: +44 (0)20 7729 0824F: +44 (0)20 7033 9077

Investor Relations

You can find information for investors and the annual financial statements at artnet.com/investor-relations.

I f you have fur ther quer ies, please send an emai l to [email protected], or send your inquiry by mail to one of our offices.

German Securities Code Number

The common stock of ar tnet AG is traded on the Prime Standard of the Frankfurt Stock Exchange under the symbol “ART.” You can find notices of relevant company developments at artnet.com/investor-relations.

Wertpapier-Kenn-Nummer

[WKN] A1K037ISIN DE000A1K0375

Concept and ProductionArtnet Worldwide Corporation

©2016 artnet AG, Berlin

http://artnet.com/investor-relations

mailto:ir%40artnet.com?subject=

http://artnet.com/investor-relations


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